If you’re like most mere mortals, your real estate will outlive you. That’s why your real estate title does double duty as an estate planning aid. It tells the world how the title can move on, whether or not there’s a will. So, be sure to vest your home title to match your long-term vision.
☛ Looking for your deed? The deed to your home is a signed legal document that proves real estate ownership and indicates how that ownership is vested. Some counties keep property records available online. Or retrieve a copy of your house deed on Deeds.com.
Whether you’re a current homeowner thinking about estate planning, or a future buyer, it’s always important to know how you legally hold the title. The way you own your home becomes part of your life story, and the land’s story.
If Your Title Is in Your Name Alone
A property may be owned by one individual or several. Businesses such as LLCs can also be owners. Or real estate can exist in the name of a trust.
In the typical scenario where individuals hold real estate, the people named on a deed hold title in specific ways. Here are the common kinds of vesting:
Sole property, or Sole and Separate Property. Some homes are vested as sole and separate property of an individual person who is in a domestic partnership or marriage. And that’s fine. If you own separate property, it’s yours to pass on. If you live in a community property state, though, your spouse might legally share your ownership unless you always kept your own, separate account for all funds used for the property’s upkeep.
Sometimes people live together but only one bought the house. They might not want to share homeownership, and that’s OK too. If only one person in a couple owns the sole, separate property, the title company may want a non-owner to sign a quitclaim deed to clarify that the other person claims no interest in the real estate.
☛ Find out how singles and couples navigate the language of their relationship status. You might want to know: Does my marital status have to be written on the deed? Can I use my preferred pronouns on the real estate deed?
If You Hold the Title Together as Co-Owners
Now, what if you buy together with a co-owner? In that case, your title vesting controls what happens to the ownership upon your death. You could own your home together in various ways:
As Joint Tenants With Rights of Survivorship.
Often abbreviated as JTWROS, this is traditionally the go-to option for couples acquiring a deed together. But the joint owners don’t have to be married. Indeed, people in nontraditional partnerships often choose a joint tenancy. That way, if one partner dies during the time they hold the title, the survivor’s rights to the entire property are automatic and not subject to contentious probate proceedings.
A right of survivorship enables a home to bypass probate court after an owner’s death. When one person dies, the survivor receives the whole property (regardless of any conflicting statements in a will or trust). Until that time, the two people named as joint owners on the deed hold equal shares, and both hold full property rights.
As Community Property.
A few states apply community property laws. These laws have tax advantages when one owner dies.
Where these laws apply, real estate acquired during marriage belongs to the couple together. Each person in the marriage or registered domestic partnership holds a half-share of the property. Both must sign any property-related documents. Each can bequeath their own share as they wish, through a will or trust.
As Community Property With a Right of Survivorship.
In this option, where available, the home would bypass probate when one of the two owners dies. The surviving co-owner would receive the whole property through the survivorship right. They would not need to worry about sharing it with the deceased owner’s heirs.
Only couples in domestic partnerships or marriages can own real estate as community property, with or without survivorship. (While some state codes still apply “husband and wife” terminology, discrimination on account of familial status or sex contradicts federal law.)
Pro tip: Even in a community property state, each individual may keep anything bought with a separate financial account, or that they received in a bequest, or that they owned previously as a single person. What does that mean? If a house is separate property, it belongs just to you — if titled in your name alone, and as long as you keep and treat it separately.
As a Tenancy by the Entirety.
In states allowing “TBE” titling, the surviving partner receives the entire property when one owner dies. Only after both partners have died does the home enter probate. Until then, TBE vesting bypasses probate and shields each partner against the other’s non-tax debts (unless the co-owners owe those debts together).
Tenancy by the entirety exists as a vesting category in a significant number of states. Legally married couples, same-sex or heterosexual, may title their home this way.
As Tenants in Common.
Two or more co-owners can use the “TIC” vesting whether or not they are in a relationship. Each may each own any percentage of the entire asset. Their percentages are stated on the deed.
Each owner decides how to pass their share on after death (by a will or trust).
Upon one owner’s death, it bears noting, the home won’t automatically belong to the surviving owner. A last will or a transfer on death deed could ensure that the survivor receives the property if that’s what the co-owners intend.
If You Take on Co-Ownership for Financial Reasons
It’s a fact. Sole ownership is out of the reach of many people today. But rents are outrageously high, too. By mid-2022, the median rental listing price went above $2,000 a month.
Some people are walking away from renting. And some people are taking on co-ownership simply to help a sidelined buyer get a mortgage and become a primary homeowner. The primary homeowner can later refinance the mortgage and become the sole owner and mortgage holder.
Other co-owners are teaming up to combine their borrowing power and live in their co-purchased homes as housemates. A representative headline from Bloomberg (May 9, 2022) reads: “Homeowners Are Seeking Roommates to Help Pay Their Mortgages.”
As buying and borrowing keeps getting harder, the tenancy in common (see above subsection) is an increasingly popular ownership model for people who would otherwise be priced out of the market. Tenants in common are free to invest in whatever share of the asset each one can cover. Each co-owner has a specific ratio of ownership, and the co-owners can pro-rate the monthly mortgage and household expenses accordingly. As there is no right of survivorship, the owners should update their wills for the time of their arrangement, in order to pass their shares on to each other or someone else if one owner dies.
Why State Law Matters
It’s state law that lays out the details of how people may own their homes and pass them along. A financial or tax adviser can explain the consequences for choosing one form over others in a given situation. And consulting a lawyer is important for anyone who is acquiring property and needs a legal agreement outlining what happens if co-owners should run into changed circumstances.
Deeds.com: LGBT+ and Real Estate Ownership (Aug. 24, 2020).
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