In order to understand how your real property will pass to your heirs, you need to know how it is held. Each type of ownership determines whether the property will pass outright to your heir or if it must go through probate. To determine which type of ownership your property has, you must look at your deed. At the top of your deed, after your name, it will state the type of ownership.
The following examples of common ownership clauses and descriptions will establish how your property is held and how it will pass to your beneficiaries:
1)John Doe, as his sole and separate property. This type of property is yours and yours alone. You may dispose of it in any way you choose, unless you live in a community property state. Then your spouse may own a share. This property will pass through probate.
2)John Doe and Jane Doe, husband and wife, as joint tenants. This is the most common way that couples own property. They each own an equal share and when one dies, the whole ownership of the property passes to the surviving spouse through right of survivorship. The share of the deceased spouse cannot be transferred to any other person in a Will or Trust. The property will pass to the surviving spouse outside of probate.
3)John Doe and Mary Doe, husband and wife, as community property. Married couples and registered domestic partners will own the property upon death of their spouse or partner, but unlike joint tenancy, the deceased spouse or partner can pass their share of the ownership in the property to someone else through a Will or Trust.
4)John Doe and Mary Doe, husband and wife, as community property with right of survivorship. This ownership works like community property as far as each spouse owning a share, but in the case of ownership upon each of a spouse, full ownership is passed to the surviving spouse outside of probate.
5)John Doe and Mary Doe, husband and wife, tenancy by the entirety. This ownership works like joint tenancy, and the surviving spouse owns the property in its entirety upon death of their spouse. This property passes outside of probate.
6)John Doe, Lucy Smith, and Mike Foster, as tenants in common. This type of ownership is split among multiple owners, and is sometimes common in large cities. Ownership does not have to be equal; each person may own a percentage interest in the property. Each owner can pass his or her interest in the property through a Will or Trust.
An estate planning attorney can help you determine which type of ownership you wish to have before you buy real property, or help you transfer the deed to a different type of ownership if you wish. To discuss your options, give us a call today and set up an appointment.