Difference Between Community Property with Rights of Survivorship vs. Joint Tenancy

By Stephanie Kurose, J.D.

Difference Between Community Property with Rights of Survivorship vs. Joint Tenancy

By Stephanie Kurose, J.D.

The right of survivorship is an important legal right that allows those who co-own assets to retain it in the event of one co-owner's death. Assets held as joint tenancy or community property with rights of survivorship automatically passes to the surviving co-owner and avoids the lengthy probate process. Although these two rights have similarities, they also differ in a significant way.

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Property Held as Joint Tenancy

When two people hold real or personal property as joint tenants, they each own an undivided, equal interest in the whole thing or things. An undivided interest simply means that each spouse is entitled to use the entire property and the interests cannot be split. Joint tenancy automatically creates a right of survivorship upon the death of one co-owner. Thus, the deceased's share automatically passes to the surviving joint tenant.

For example, if a married couple owns their house as joint tenants, each spouse owns an equal interest in the house. If one spouse dies, the remaining spouse automatically becomes the owner of 100 percent of the house. Because this ownership transfer is automatic, it can avoid probate.

Community Property

Nine states currently recognize this legal concept including Arizona, Idaho, Louisiana, Texas, Wisconsin, Nevada, Washington, New Mexico, and California. If you live in one of these nine states and are married, most assets acquired during your marriage are considered community property, unless you and your spouse make an agreement otherwise. Examples of this are income and anything bought with that income during the marriage. However, anything acquired before marriage, or any anything inherited by one spouse is not considered a community asset.

With this type of asset, each spouse has the right to pass their share to whomever they wish, except for the other spouse. Upon the death of one spouse, the surviving spouse is typically entitled to at least some share of the assets, depending on how many children are involved.

Community Property with Rights of Survivorship

Community property with rights of survivorship entitles the surviving spouse to the deceased's share of the assets. Spouses cannot pass their stake to someone other than their spouse in a will. In addition, this type of stake is restricted to married couples or registered domestic partners.

One of the main differences between these two forms of rights involves taxes on the sale of jointly owned assets. When one joint tenant sells something held as joint tenancy before the death of the co-owner, a portion of that profit is subject to capital gains tax. By contrast, community property with rights of survivorship is not subject to such taxes.

In addition, parties do not have to be married or registered as domestic partners to hold assets as joint tenants. For example, siblings can own assets inherited from their parents as joint tenants. However, community property with rights of survivorship is limited to married couples or domestic partners. Understanding the differences between these two rights will be key to planning for the future.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.