Monday, January 24, 2011
Types of Ownership
Joint ownership? Tenants in common? Right of survivorship? For many people, it is easy to get confused about how property is owned. This week, we put together a quick guide for different ways to own property.
Our office regularly helps clients record property deeds for real estate and real property. We find it is important to educate our clients on the various ways that one can own property. There are tax advantages or disadvantages for every situation, which we will not be exploring today.
Joint Ownership With The Right Of Survivorship: (JTWROS) A common way to own real estate, two or more individuals own one piece of property together. All joint owners own the whole property (in other words, not easily partitioned). When one joint owner dies, the other owner automatically inherits the decedent’s share (survivorship). The decedent’s Will won't control how his or her share is distributed in this case, thus avoiding probate.
Tenants In Common: Two or more individuals own a share of the property. The property is easily partitioned. For example, you own 50% (the east side) and I own 50% (the west side). Upon death, the tenant in common’s share is passed through his or her Will. The advantage is that this type of property is easier to divide/partition, but doesn't avoid probate.
Tenancy By The Entirety: This is similar to Joint Ownership with Right of Survivorship above, but it reserved for legally married couples. This type of ownership offers additional creditor protection for the married couple. This method of ownership avoids probate.
Payable On Death (POD)/Transfer On Death (TOD) Accounts: These types of designations are typically found on a bank account or other financial account. An individual owns the property while he or she is living and has full control over it. The POD or TOD beneficiary only has access to the account upon the owner’s death. The advantage is that it passes directly to a person, and not through the Will, thus avoiding probate.
Life Estate: Used for real property, allows an individual to have a right to live in a property while he or she is living, but another person retains ownership interest. Can be advantageous for seniors, and for several situations, but you must be careful in setting up a life estate.
It’s important to know how your property and assets are titled, and who owns what. Whether it’s jointly held or not makes a big difference, for inheritance, planning and tax purposes. A good estate planning attorney always asks the client about how property is owned, and if the client doesn’t know, the attorney helps the client find out.
To schedule a consultation to review your estate plan, call us today at (215) 706-0200.