Severing Joint Tenancy

Severing Joint Tenancy

John and Mary have set up a revocable trust and transferred all their assets to it except for one piece of real property. John and his brother Mike own that piece of real property ‘as joint tenants.’ This means that if one of them dies, the other one will own 100% of the property.

John could ‘sever’ the joint tenancy by deeding his share of the property to the trust of John and Mary. The good side is that if John dies before Mike, John’s half goes to Mary (ie Mary benefits from it through the trust) and it does not pass to Mike. The bad side is that if Mike dies before John, Mike’s share passes either according to Mike’s Will or if Mike has no Will, then according to the laws of intestate succession of the state of Mike’s residence (ie. the state gives you a Will if you have none).

If the joint tenancy were severed and Mike died first with a Will leaving everything to his girlfriend, then she would get half of the property in question. This would be true even if Mike didn’t know that John had severed the joint tenancy by deeding his share to the trust of John and Mary. John could sever the joint tenancy and ask Mike to do a codicil to his (Mike’s) Will giving his (Mike’s) interest in that property to John.

If Mike signed a codicil after the severance, there would be a probate on Mike’s share of the property at Mike’s death, but at least John would inherit that share. But Mike could change his mind and do a new Will which gives his share to someone else, and this would be valid even if Mike didn’t tell John about the new Will. Finally, Mike might say: “This is heads you win, tails I lose: John wants  to make sure Mary is protected if John dies before me and John wants to make sure that he (John) is protected if I (Mike) die before him. Why should I cooperate?”


About randyspiro

I am a super lawyer in California with dual specialization in Estate Planning and Taxation.
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