How Do You Own Your Property?
When it pertains to estate planning, it’s essential for both you and your lawyer to understand how your property is entitled. Understanding how you own your property has an impact on what estate planning techniques you use– and whether your estate plan is even efficient. Here are the basic classifications of property ownership:
Joint ownership includes property that’s held as Joint Tenants With Rights of Survivorship, and property that’s held as Tenants in Typical. It is very important to know the difference in between these two types of joint property, due to the fact that they’re dealt with entirely in a different way when it concerns estate planning and probate.
Joint Tenants with Rights of Survivorship
When you own property as Joint Tenants With Rights of Survivorship– a house, for instance, or a checking account– and you die, the entire property passes to the surviving owner beyond the probate process. This is great news if it’s what you mean to have occur.
But say you own a home with Jane as joint occupants, and you desire the house to go to Take legal action against when you pass away? If you do not comprehend how your property is entitled, you might just write a will that says you want your house to go to Sue. This won’t work, because your will has no result on property that’s titled as Joint Tenants With Rights of Survivorship. The will only controls the probate process, and your home passes outside of probate. So, it’s important that both you and your lawyer know how your property is titled.
Tenants in Common
What if you and Jane own a home together as Renters In Common? You each own an interest in the home, and when you pass away, your share of the home is dealt with like private property. If you have a will, the will controls who gets your share of the home. If you have no will, then the state intestacy statute controls who gets your share of the house.
Title by Contract
Some types of property are owned by you, however you’ve provided your beneficiaries a right to the property through agreement. Examples consist of life insurance coverage policies, payable on death accounts, annuities and retirement accounts. When you have actually designated a recipient to receive this kind of property, then, upon your death, the property passes to your beneficiary outside of the probate property.
Again, your will has no effect on this type of property. Especially if you’re recently divorced, it’s important to review your recipient designations in addition to changing your will, to make sure you don’t inadvertently leave your ex-spouse an inheritance.
Property that’s entitled exclusively in your name, without a recipient designation, is your individual property. When you pass away, this property will go through probate and is managed by your will, if you have one.
In order to avoid probate, you may think about transferring your specific property into a Revocable Living Trust.