Real estate is often the largest asset class in estates, and titles are essential when determining how these assets behave after the death of an owner. In other words, understanding ownership types will probably be a prerequisite to understanding the role of real estate in your estate plan.
This article looks at a type of ownership you might already be familiar with if you are married: joint tenancy. However, please understand that this is just general information and it might not apply to your specific situation.
What is joint tenancy?
Joint tenancy is a type of ownership in which you would own equal shares of your property with someone else — your spouse, for example. Specifically, you obtain an equal interest based on the same ownership instrument at the same time as the other joint tenant.
You might use this type of ownership in various situations. However, it might not be as flexible as other structures if you have very specific goals or complex structures in mind.
What happens when one tenant dies?
What are the things you will probably find most interesting about joint tenancy is what happens when one of the tenants dies. In this type of ownership, you have a right of survivorship.
Essentially, all of the living tenants always have an equal share of the property. When one of the tenants dies, the shares of the others get proportionately larger. For example, if you owned a house with five other joint tenants, everyone would have 20 percent. If one of those people died, the remaining four would each have 25 percent.
There are several alternative forms of ownership, some of which might suit your purposes better than others. Additionally, you can often change structures after you establish them. In short, there is probably a custom solution available to secure your property in an appropriate way.