Outright Ownership Tenancy by the Entirety
Tenancy in Common Misconceptions about Joint Tenancy
Joint Tenancy  
Outright Ownership

Suppose Harry owns a farm. That's his property. He can sell it. His creditors can levy on it. It will pass according to his estate plan.  ^Back to top

Tenancy in Common

Harry owns another farm together with his brother John. They each own an undivided half interest as tenants in common. They could own in unequal shares. There could be more co-owners. You can't point to either of their shares. They'd have to work out partition to separate their shares. Harry can sell his share, his creditors can levy on it, and he can leave it as part of his estate. ^Back to top

Joint Tenancy

Harry and his wife Harriet own a farm as joint tenants with right of survivorship. They own equal interests. There could be multiple owners -- they'd all own equal interests. Harry could sell his portion, and the new buyer would become a tenant in common with the other parties. A creditor can levy and sell Harry's share. If Harry dies, his portion passes to Harriet (or all the surviving joint tenants) by operation of law, not part of his estate.

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Tenancy by the Entirety

Harry and Harriet own their home as tenants by the entirety. This is a relationship only between spouses. In Illinois this applies only to the residence. Harry cannot sell his share alone. The property can only be sold by both together. Upon death, it will pass to the survivor. Harry's creditors cannot levy on it. ^Back to top

Misconceptions About Joint Tenancy

Most people get their ideas about joint tenancy from bank accounts. When A and B set up a bank account in joint names, they sign an agreement with the bank that the bank may pay out money on either signature. When the bank gets a check signed by A, they don't really care whether B is alive -- they'll treat the account the same way in either case. The effect at death is the same as joint tenancy -- it belongs to the survivor -- but it goes beyond joint tenancy during life by allowing either party to write a check and effectively draw out the entire account. Similar procedures may be set up with many brokerage accounts and mutual funds. But that's not a usual joint tenancy. In a joint tenancy in real estate, a joint tenant can only sell his or her fractional interest (if they can find a buyer). Because of securities rules, stock certificates held in joint tenancy require both signatures to sell the stock. One can't even sell their fractional share without the other, or taking special action. So what? How do these legal technicalities affect real life? Well, consider Joan, who put her stock in joint tenancy with her daughter Margaret so Margaret could manage her finances. It was bad enough when they discovered Margaret couldn't sell without Joan's signature. But when Margaret had a stroke, Joan could no longer sell her own shares without Margaret's signature. Joan would have been better off with a Trust.
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