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| DEEDS TO REAL ESTATE Perhaps, one of the most serious estate planning decisions that people make is one that is given very little thought. When people take title to their real estate, also called real property, they give little thought to the particular way they take title. Unfortunately, many people do not know that they have any choice in the matter. And, of course, this decision is most often made in regard to a very precious and personal piece of real estate ... the family home. You do have a choice of how to take title in the first place ... and you can change the form of ownership at any time, if all the owners agree to the change. While we normally think of the word "Tenant" or "Tenancy" in regard to a renter, the term is used, legally, in reference to a form of ownership. So, try to think of "Tenancy" as ownership. Sole Ownership aka Ownership in Severalty. This would be the most common way of ownership for a single person. However, married people can also own property in this way. But, a married's owning in severalty does not keep assets out of a divorce settlement. The laws as to divorce and death in sole ownership are different in community property states and in common law states. So, consult your attorney if you are considering, as a married person, taking title in Severalty. Joint Tenancy, aka Joint Tenants With Right of Survivorship. This form of ownership is held by two or more people and they need not be related in any way. It merely means that the survivor or survivors own the property. Suppose five people own a tract of land in Joint Tenancy. If one dies, the other four own it. When a second one dies, the other three own it, etc. It does not pass via the will of the decedent. It passes by the power of the deed. Tenants by the Entirety. This form of ownership is the same as Joint Tenancy with one major exception. It can be held only by husband and wife. Tenants in Common. This is a form of ownership wherein two or more people own a piece of real estate by owning an undivided half of the realty. If, for example, the real estate consists of 100 acres of land and is owned by two people, each owns an undivided half of the land. He or she does not own "this 50 acres" or "that 50 acres." And for estate planning purposes, it is very important to know that the undivided half passes by each person's will ... if a decedent has a will. If there is no will, that ownership interest passes by the state's laws of intestacy. Life Estate. A life estate means that a person owns his interest in that asset only as long as he lives. For example, you could change the title on your house to read, "I have a life estate. At my death, my daughter has a life estate. At her death, my grandchild gets the house outright." Partnership Ownership. A partnership can own real estate. When a partnership owns an asset, each partner enjoys some benefits of ownership. This is an excellent means of ownership for a family that wants to, progressively, give the younger generations more ownership. You can give a charitable cause an interest in your real estate. For example, you might say in the deed, "I have a life estate in this property and, at my death, "The Foundation" is the owner." |
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