By: John P. Napolitano, CFP®, CPA, PFS, MST

Having more than one owner to just about anything may be appropriate for some married couples, but for non-married persons, joint ownership often creates more problems than it may be worth.

Let’s start by defining to two most common forms of joint ownership. First, there is the joint tenant in common form of ownership. Joint tenants in common mean that each individual owner has an undivided ownership interest in the property, be it a coin collection, bank account or real estate. So if you are a joint tenant in common in a two family house, you can sell your half whenever and to whomever you want. When you die, that half of the property will pass to whoever you had designated in your will.

The other type of joint ownership is called joint tenants with rights of survivorship. Joint tenants with rights of survivorship do not offer an undivided ownership interest. The rights of the owner’s interest is somewhat limited. If you own a two family house with your brother as joint tenants with rights of survivorship, and one of you passes away, the decedents half of the property goes to the surviving owner regardless of what your will says. This may be a huge problem, especially for inheritors of real estate, who will only find out after someone passed.

Other problems with joint ownership include asset protection and flexibility. In terms of asset protection, consider this: your brother, the wonderful, huggable, bear of a guy is involved in some sort of financial difficulty, litigation, or even a divorce. Should he lose or receive outstanding judgments from creditors, any asset that he owns is now subject to the creditor’s claims. That may include your two family house. If you happen to be in the process of selling to a qualified buyer, and your brother’s creditors have slapped a lien on the property, that lien must be satisfied before the title can pass to the new buyers.

A similar, unfortunate situation could develop if one of the owners is suddenly unable to carry their share of the debt, or work needed to maintain the property. The mortgage holder doesn’t care that you paid your half; they need the whole payment and will consider you equally delinquent. The solution- do not own property jointly with anyone but your spouse. This doesn’t mean that having partners is a bad idea. It simply means that a little planning needs to go into the form of the ownership. I would suggest a Limited Liability Company, Partnership or Corporation to own the property with each of you owning a share in the new entity created. An entity alone is not the holy grail of protection; you must have a legal agreement behind it clearly spelling out the duties, obligations, rights and remedies of the owners.  See a qualified attorney and get this situation fixed before something ugly happens. This legal bill could be the best ounce of protection that you’ve ever paid.



John P. Napolitano CFP®, CPA is CEO of US Wealth Management in Braintree, MA. Visit JohnPNapolitano on LinkedIn or The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. John Napolitano is a registered principal with and securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through U.S. Financial Advisors, a Registered Investment Advisor. U.S. Financial Advisors and U.S. Wealth Management are separate entities from LPL Financial. He can be reached at 781-849-9200.