Ownership of Assets by Non-Married Couples

You and the love of your life have lived together for years being perfectly content not being married.  You have acquired assets together, like a residence, a second home, bank account or other items.  But what will happen when one of you dies? 

Thinking that because you have both names on the asset, the surviving partner will automatically inherit the asset, and that could be very true for the most part.  There are two types of ownership – joint tenants with the right of survivorship (where the survivor automatically inherits) and tenants in common (where each is deemed to own a one-half interest).  The type of ownership is not automatic.

On a deed, it should be clearly specified which type of ownership is intended.  If it is as tenants in common, each of the tenants have the ability to sell or pledge their one-half ownership.  In the event of death of one of the owners, the surviving owner does not automatically inherit the deceased owner’s one-half share.  That share will pass pursuant to the provisions of a Will of the deceased owner and, if no Will, then according to the Intestacy Laws in the state of residence.  For example, one of the unmarried couple dies without a Will and has children from a prior relationship.  Those children could have an interest in the property due to intestacy.  Is that what is intended? 

Also, there may be two names on, let’s say, a bank account.  Is that with right of survivorship or tenants in common?  It is best to check with the bank.  Banks can treat the type of ownership differently. 

Regardless of the type of ownership, when assets are jointly owned by unmarried individuals, there is the subject of inheritance tax.  In New Jersey, there is no inheritance tax to a surviving spouse (legally married) as in Pennsylvania.  But, when the couple does not have “that piece of paper”, the taxing authorities step in and take their share – 15 percent in both New Jersey and Pennsylvania when one of the “couple” passes!

Live as you so choose; that is your right.  But, if you fit into the category that is the subject of this blog, be prepared.  When one of you passes away, you could be in for a hefty inheritance tax payment. 


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About the Author

Kay Sowa is a paralegal in the Trusts and Estates Group at Capehart & Scatchard, P.A. She is an IRS Enrolled Agent, an Accredited Estate Planner®, and a Certified Trust and Fiduciary Advisor. She oversees the trust and estate administration practice for the firm. She is an accomplished author and lecturer who has frequently spoken on behalf of a number of organizations including the National Business Institute and the Institute of Paralegal Education.

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