Can a Trust Hold Property in Joint Tenancy?

When performing some, what I thought was routine, legal research as a normal part of my practice, I came across a reference to trusts holding property in joint tenancy with another party and the legal support in the California Civil Code of all places. This sent me down a small rabbit-hole because the prospect of this was strange to me.

Before going into what I found, I need to quickly give some context as to why this made me raise my eyebrow. We have done a video on joint tenancy vs tenants in common but the short explanation for joint tenancy is that it is co-ownership of property between two or more parties with a right of survivorship and requires some unities when creating the joint tenancy. Firstly, the holders need to have acquired their interests at the same time. Second, they need to have the same interest (I.e., 50/50 if two parties or 1/3 each if three). Third, the parties need to each have access to the whole of the property rather than sectioning off sections. Fourth, the parties need to have acquired their interest from the same source. Finally, a right of survivorship means that upon the death of a co-owner, their interest terminates automatically, and the property is held outright by the surviving co-owner(s).

The important aspect is the right of survivorship as it is the primary difference between joint tenancy vs tenants in common (where the deceased person's interest stays in their estate at death). Due to this, it stands to reason that a trust would not be allowed to be a joint tenant on a property with another since the trust is a legal entity that won't "die" but only "terminate" after the conditions have been met - usually the distribution of the trust property held in it. This means that even if we consider the trust's death to be its termination, the trust can only terminate after it transfers out its interest meaning the joint tenancy is broken regardless since the trust no longer owns the property.

This brought me to the California Civil Code, section 683(a), of all places. The Civil Code does have rules regarding holding title to property, but one would expect rules regarding trust holding title to property to be in the code sections governing trusts (in California, that being the probate code).

Regardless, the relevant provisions of section 683(a) hold,

"A joint interest is one owned by two or more persons in equal shares, by a title created by a single will or transfer, when expressly declared in the will or transfer to be a joint tenancy, or [...] when granted or devised to executors or trustees as joint tenants."

Taking out some of the extra fluff and leaving only the relevant wording, we have,

"A joint interest is one owned by two or more persons in equal shares, by title created by a single transfer, when expressly declared in the transfer to be a joint tenancy, or when granted to trustees as joint tenants."

What this seems to imply is that, yes, a trust can hold title with another party, as joint tenants - trust title being vested in the trustee since they are the person who manages the trust assets. However, the code is silent on how this affects the right of survivorship that accompanies joint tenancy. Even if we consider the "death" of a co-owner to be the death of the trustee of the trust, this wouldn't fit as (1) the trustee is not the owner, only the manager, (2) the trust owns the property, which as I mentioned, cannot die, and (3) if the trustee were to die, either the trust will have a provision on who succeeds the prior trustee, the beneficiaries can elect a new trustee or a court will appoint a new trustee. The trustee dying doesn't mean the trust then loses its assets - it will continue on and have guidance on what to do next.

To come back to the question at hand, yes, it appears a trust can hold title to property with another as a joint tenant but it's something I would highly recommend against doing unless there is some specific strong legal support for it - something I have yet to come across. It's an interesting legal implication in a theoretical sense but shouldn't go beyond that. The way our office interprets the matter, it appears to be more of a one-way street in that if a trust holds a property in joint tenancy with an individual, when that individual dies, their interest goes to the trust, but there will not be a case where the trust’s interest goes to that individual.

A trust can hold title to assets with third parties, but the entire purpose of a trust is to designate who controls the trust assets, how those assets are safeguarded, and where they should go after the settlor passes away. To risk losing a trust asset because of a niche way of holding title is, frankly, plain silly. If you find yourself in a situation where your trust is going to hold title to property with a third party, you should have an estate planning lawyer involved to ensure title accurately reflects your intent and doesn't violate the trust provisions.

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