What is “Joint Tenancy”? – Part 1

“Joint Tenancy” isn’t a “breaking news” topic or one that most people even think much about. But it is a very common form of ownership that has significant estate planning and other effects that few people understand. The topic is actually worthy of an entire legal treatise, but in order to get across a few important points, I’ll present the topic in the form of an irregular series of short articles.

In this series, we’ll look at some of the consequences of joint ownership, including:

  • Who really owns the jointly held property?
  • Can either joint owner take money in a joint account or otherwise act with respect to the jointly held property?
  • Creditor rights and bankruptcy.
  • Estate Planning.
  • Gift and Estate taxes.
  • Income taxes.
  • Medicaid and elder law.


So, let’s begin with the most basic question: Who owns Joint Tenancy (“JT”) property?

(We’ll use the expression “Joint Tenancy” or “jointly held” to mean the more precise term “joint tenancy with right of survivorship”. There are other forms of co-ownership, such as tenants in common. A tenancy in common is where each owner has an undivided fraction of the whole asset, but that person’s fractional interest does not pass to the surviving co-owners on that person’s death.)

I find that most people think that both joint owners own the JT property equally. But the answer to “who owns the JT property” actually depends on state law and the type of property. And the answer to “who owns the JT property” under state law drives most, but not all, of the other consequences (tax, bankruptcy, and so forth).

Some property is inherently “true joint tenancy” property. For example, if I take a piece of raw land (call it “OneAcre”), and deed it to you and myself as joint tenants, we each own an undivided one-half interests (with right of survivorship) in the property. (A minority of states permit unequal joint tenancies. For example, I could deed to the two of us as joint tenants, with you have a one-third undivided interest, and me a two-thirds undivided interest. Most states, including Massachusetts, only permit equal joint tenancies.)

A minority of states also treat all joint tenancies this way. For example, if I added you as a joint tenant to my bank or brokerage account, you would immediately own a one-half undivided interest in the account. We call these “True Joint Tenancy” (“TJT”) jurisdictions. In a TJT jurisdiction, if I open a joint bank account with you and I fund it with $100, you own $50, and I own $50 of the account.

But a majority of states (including Massachusetts) are not TJT jurisdictions. Rather, joint bank accounts are really for convenience, and quite possibly for inheritance purposes, but are deemed by law to be owned in proportion to contributions and withdrawals. The ability of a non-contributing joint tenant to withdraw funds is there to protect the bank but does not confer rights on the non-contributing joint owner. The contributing joint owner would still have a cause of action should the non-contributing joint owner withdraw funds without permission.

Joint brokerage accounts and United States Savings Bonds largely work the same way and are dependent upon state law. Thus, under most state law if I buy a US Savings Bond with my money, but show us both as joint owners, the bond is 100% mine.

The key factor is this: does the contributing joint owner continue to have the right to withdraw all of the funds without liability to the non-contributing joint owner? If so, other factors do not matter. For example, clients commonly offer to us, as evidence that an account the client funded but is joint with daughter is really the daughter’s, the fact that the daughter’s social security number is on the account. This is irrelevant as to who owns the account, and who should be reporting the taxable income.

However, intent to make a gift of half of the asset can be a factor in determining whether or not there has been a completed transfer in some situations where state law is unclear. In those cases, other factors such as social security number, who has been reporting the taxable income, and the use of the asset and its income, can potentially make the case that the account or a portion of it should be deemed to belong to the non-contributing joint owner. But such cases are rare.