WHY THE DEVIL IS IN THE DETAILS OF A JOINT TENANCY WITH RIGHT OF SURVIVORSHIP DEED – AND PROBLEMS TO EASILY AVOID.

Preparing the correct estate planning deeds when you create your will or trust is vital to avoid problems with the transferring of joint property. During the ongoing pandemic we have found that some people will continue to go to the grocery store, visit the doctor’s office and go to restaurants for take-out, but have avoided their estate planning attorney’s office.

Even simple legal transactions should be evaluated by and legal counsel obtained from a qualified estate planning attorney to avoid lasting negative outcomes.

During the last few months, a number of issues with deeds to property have come through our office, which have caused unnecessary delay and complications after the death of a loved one.

A standard and basic practice for families who may not have a formal estate plan is to title real property between spouses as either joint tenancy with right of survivorship or as community property with right of survivorship.

Although there is no detailed planning involved in such deeds, both of these options provide an effective way to transfer real estate to a surviving spouse after the death of the first spouse.

A deed is usually a very simple legal document, but if not done properly, unintended complexities may arise that are completely avoidable.

A well-prepared joint tenancy deed with right of survivorship, for example, should contain the following two additional elements:

1. Express words in the actual grant portion of the deed that indicate that the property is to be held as joint tenants with right of survivorship (“JTWROS”). This language must be in the actual form of the deed, not just in the acceptance attached to the deed.
2. An “Acceptance” is attached to the JTWROS deed where the Grantees (new owners) agree to accept title in the form of JTWROS and not as joint tenants nor tenants in common or another form of ownership.

In recent months we have come across the following deeds:

1. Deed where the language “as Joint Tenants with Right of Survivorship” is clearly within the actual grant language of the deed, but there was no attached Acceptance of JTWROS to the deed signed by the Grantees; and
2. Deed that does not contain the express language “as Joint Tenants with Right of Survivorship” in the grant portion of the deed, but the Grantees signed an attached Acceptance indicating they intended to accept title as JTWROS.

These two examples are responsible for the following potential problems:

1. Problem #1: JTWROS language is not contained in the grant portion of the actual deed: Even if an “Acceptance” is signed by the Grantees clearly showing their intent to take title as JTWROS, survivorship rights were not created under Arizona law as the express language required was not contained in the grant portion of the deed. Where there is an attached Acceptance to a defective deed, the courts may allow the reformation of such deed.
2. Problem #2: There is not an Acceptance of JTWROS by the Grantees: If a deed does not contain an Acceptance by the Grantees expressing their intent to take title with right of survivorship, such intent may be established by extrinsic evidence.

The bottom line is a family may have to work with their title company to determine whether it will insure title in either of these two situations described above. If not, the family may require a court reformation of the deed or be required to provide additional extrinsic evidence to the court in order to prove intent prior to the title company being willing to insure title on the sale or transfer of the property.

Having dealt with both of these issues, it really depends on the title company. One title company indicated that they will not insure title nor honor survivorship rights of a spouse and required the family to probate the deceased joint owner’s portion of the property since JTWROS language was not expressly documented in the grant portion of the deed. Another title company, who was actually involved in helping prepare the deed, said they would insure title in these cases, most likely because they helped create the defective deed.

What we have learned is that, to prevent unnecessary delay, expense and potential problems when dealing with real property after the death of a joint owner, it is important to seek proper legal counsel prior to signing any legal document, including even a simple deed.

If you have any questions regarding family based estate planning, Arizona probate administration, trust administration or any other legal issues, please call please call the attorneys at Rowley, Chapman & Barney (480) 833-1113 .

Attorney Profile: Kenneth Barney, Estate Planning
Main Areas of Law:
Estate Planning – Wills, Trusts & More
Probate in Arizona
Blog: Ken Barney’s articles