How you own property can affect how your estate is distributed to your heirs after you die. With that in mind, let’s see how property ownership affects estate planning:
Type I: Sole Ownership
This sort of property is owned entirely by you, with no other person having any rights to the property. You can identify that a property is owned by a single person if the deed has words to the effect: “Jason, a single man” establishes title as sole ownership.
Property owned by an individual can be passed to your heirs through a Will or Trust.
Type II: Joint Ownership
In this type of ownership, a property is owned by one or more people, apart from you.
Joint ownership can take several forms:
Tenancy in common: In this type of ownership, every owner owns a specific percentage of the property. All the owners are free to mortgage or sell their share of the property. Thus, if you have bought a property under tenancy in common agreement, your portion of the property passes on to the beneficiaries you have named in your Will.
Community property: This type of property ownership can only exist between married couples and is only acknowledged by certain US states, Texas being one. Under state law, real property purchased after the marriage has taken place is considered community property and will automatically go to the surviving spouse as long as the children of the deceased are also the children of the spouse. If the deceased has children that are from a previous marriage, the deceased’s interest in the community property estate is transferred to them instead of the spouse. You can change that of course, by outlining your wishes in a Will or Trust.
Tenancy by the entirety: This is another type of joint property ownership, under which only a husband and wife can be the owners of the property. In this type of ownership, you cannot sell or mortgage your property without the consent of your spouse. On the death of a spouse, the ownership of the property is transferred automatically to the surviving spouse.
Joint tenancy with right of survivorship: In this type of property ownership, all the owners have equal rights to the property. Similar to tenancy by the entirety, none of the owners can sell or mortgage the property without the consent of the other co-owners. After the death of one co-owner, his right to his property is transferred to the surviving owners.
To learn more about how property ownership affects your estate plan, give us a call today.