Definition
The right of survivorship is a legal feature of certain property ownership structures in which a deceased owner’s interest automatically transfers to the surviving co-owner(s), rather than passing through probate or according to a will.
Where It Applies
- Joint Tenancy
- Community Property with Right of Survivorship (in certain states)
- Tenancy by the Entirety (in some jurisdictions)
How It Works
When one owner dies:
- Their ownership interest automatically transfers to surviving co-owner(s).
- No probate court proceeding is required for that transfer.
- The deceased owner's heirs do not inherit that interest.
Example
Two spouses own a property as joint tenants with right of survivorship. If one spouse passes away, full ownership immediately transfers to the surviving spouse without probate.
Right of Survivorship vs. Tenancy in Common
- With Survivorship: Ownership passes automatically to co-owner(s).
- Tenancy in Common: Deceased owner’s share passes through estate or will.
Advantages
- Avoids probate delays and costs.
- Provides clarity in ownership transfer.
- Simplifies estate administration.
Disadvantages
- Overrides provisions in a will.
- May unintentionally disinherit heirs.
- Limits flexibility in estate planning.
Severance
In joint tenancy, if one owner transfers their interest during their lifetime, the right of survivorship may be severed, converting ownership into tenancy in common.
Tax Considerations
- May qualify for step-up in basis depending on ownership type and state law.
- Estate and inheritance tax implications vary by jurisdiction.
Investor Considerations
- Less common in commercial syndications.
- More common in residential or family-held properties.
- Title review is essential during acquisition.
Common Pitfalls
- Failing to align ownership structure with estate plan.
- Unintended consequences upon death of one owner.
- Misunderstanding state-specific requirements.