What does the obscure acronym JTWROS signify and why is this abbreviation important with my estate planning?

By: Chad Schmidt, Trust Officer

The acronym stands for Joints Tenants With Right of Survivorship and the ownership of the property is jointly shared between two individuals.  Often the co-owners are a married couple and it is the form of ownership for the family home.  But married couples aren’t the only individuals that can use this type of ownership, JTWROS can be used with friends and business partners. 

So why is this acronym important to me and my estate plan?  Because this form of ownership is probably the most commonly used estate plan whether people know it or not.  Frequently people think that the ownership designation of JTWROS avoids probate and that it is the only fair way to own property with another individual.  There are two major issues with this common perception:

  1. JTWROS doesn’t avoid probate it just postpones it. When one joint owner dies, ownership will transfer to the other owner without probate. But when the surviving owner passes along without adding another joint owner, which is often the case, or if both owners die at the same time, the asset must go through probate before it is passed along to the heirs.
  2. Your will or any trust agreement will not be used to control how property that is jointly owned is transferred. This is because the transfer of ownership happens immediately upon your death.  A large part of your estate planning inadvertently is circumvented because the asset is jointly owned.  Sometimes this is planned and both owners are comfortable with this immediate transfer of ownership.  But other times, when I sit down with people and we talk about this topic, they don’t realize that this is how the transfer of ownership will take place and see that there could be future issues without any control of the asset.

There are other reasons why JTWROS designation might not be the best estate planning tool for you and it is best to review this important part of your estate plan with your attorney.