Skip to Local Navigation
Skip to Content
California State University, Long Beach
Print this pageAdd this page to your favoritesSelect a font sizeSelect a small fontSelect a medium fontSelect a large font
 
Text Resize
Friday April 18, 2014

Personal Planner

Separate & Joint Property

Separate & Joint Property

"My brother Pete and I own a ranch together," said Joe to his advisor. "We inherited the four sections of our ranch from my mother. As a single person, I think that I will plan to leave 50% of my share to Pete and the other half to my favorite charity. Of course, if Pete dies, he is married and probably wants to leave his share to his spouse and children."

Do Pete and Joe need to review their estate plans? Yes! These two rancher brothers held title as joint tenants with right of survivorship. If the single brother (Joe) were to pass away, Pete would inherit his brother's half of the ranch. Even though Joe stated that half of his share should go to his favorite charity, nothing will be given to charity.

On the other hand, if the married brother (Pete) were to pass away, under the joint tenancy with right of survivorship rules the ranch now belongs in its entirety to Joe. Pete's spouse and children would have no benefit, with the exception of some states in which a forced spousal share might provide some relief.

Do you know how your property is owned? This can make a huge difference in your plan, just as it did for Pete and Joe. Property can be owned outright, as tenants in common, as joint tenants with right of survivorship or in a trust.

Outright Ownership


Joe is a single person and also owns a home in a small community close to the ranch. He has complete title to the property in his name. The legal term for owning property outright is "fee simple" title. Because Joe owns the property outright in his name, he is obligated to personally pay the taxes, mortgage interest and any other costs of maintaining the property. However, he has complete use of the property and may transfer it during life or through his estate to any person or charity.

Tenants in Common


With property held as tenants in common, each person has an undivided interest in his or her portion. For example, Pete and Joe could change the title to the ranch to tenants in common. Each would still own 50% of the entire ranch. The taxes, the mortgage payments or any other costs would be divided between the brothers. However, because the ranch is held as tenants in common, each person may make transfers of the property during life or through his estate. Joe could decide to leave 50% of his half to Pete and 50% to favorite charity. Pete could leave his 50% of the ranch to his spouse and children.

Joint Tenancy with Right of Survivorship


The property could be held jointly, but under state law the surviving tenant receives title to the property when the first passes away. For example, if Pete were to pass away while the property is held as joint tenants with right of survivorship, Joe then would own the entire ranch. Both Pete and Joe would pay their share of taxes and the mortgage during life, but the property is transferred by state law to the surviving joint tenant, not according to the will of the first to pass away. For anyone other than a surviving spouse, joint tenancy with right of survivorship may result in an accidental disinheritance.

Trusts


It is possible to transfer real estate and other assets into a trust. Each person deeds his or her portion into the trust. The trustee owns the entire property for the benefit of the income and remainder recipients. The trustee will manage the property, collect income and distribute it according to the terms of the trust document. A trust is especially useful if you own property in different states.

Therefore, it is very important to understand how your property is owned. When you are creating your estate plan or are considering a transfer or gift during life, you need to be certain that you first understand the ownership. Then you will be able to make a legal transfer to the intended beneficiary.

Many estate lawsuits have occurred because individuals thought they had the right to transfer property by will, but there was a joint tenancy with right of survivorship that transferred the property to a surviving owner. If one person receives under the will and another by right of survivorship, litigation is quite likely. By understanding the way in which your property is titled, you can be certain that your intentions are carried out according to your plan.

Published September 13, 2013


Previous Articles

What Do You Own?

Chronic Illness - Care of Your Property

Chronic Illness - Care of Your Person

Your Plan for Senior Care

Planning with a Serious Illness

scriptsknown
If you have trouble accessing this website please call 562-985-5489.
eNewsletter Sign-Up
Workshop and Events
Learn different ways to make a gift
Find out different types of assets to give