When it pertains to estate planning, it’s vital for both you and your lawyer to understand how your property is entitled. Knowing how you own your property has an effect on what estate planning techniques you utilize– and whether or not your estate plan is even reliable. Here are the standard classifications of property ownership:
Joint ownership consists of property that’s held as Joint Tenants With Rights of Survivorship, and property that’s held as Occupants in Common. It’s important to understand the distinction in between these two kinds of joint property, because they’re treated entirely differently when it concerns estate planning and probate.
Joint Renters with Rights of Survivorship
When you own property as Joint Tenants With Rights of Survivorship– a home, for example, or a bank account– and you pass away, the entire property passes to the enduring owner outside of the probate process. This is fantastic news if it’s what you intend to have occur.
But state you own a home with Jane as joint renters, and you desire the home to go to Sue when you die? If you do not comprehend how your property is entitled, you may just compose a will that says you desire your home to go to Sue. This won’t work, since your will has no impact on property that’s titled as Joint Tenants With Rights of Survivorship. The will only controls the probate process, and the home passes outside of probate. So, it’s important that both you and your attorney know how your property is titled.
Tenants in Common
What if you and Jane own a house together as Renters In Common? Then you each own an interest in your house, and when you pass away, your share of your home is treated like individual property. If you have a will, the will controls who gets your share of the house. If you have no will, then the state intestacy statute controls who gets your share of the house.
Title by Contract
Some kinds of property are owned by you, however you’ve offered your recipients a right to the property through agreement. Examples consist of life insurance policies, payable on death accounts, annuities and pension. When you have actually designated a recipient to get 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 essential to review your beneficiary designations in addition to altering your will, to make sure you do not unintentionally leave your ex-spouse an inheritance.
Property that’s titled solely in your name, without a recipient designation, is your specific property. When you die, this property will undergo probate and is controlled by your will, if you have one.
In order to prevent probate, you may consider transferring your specific property into a Revocable Living Trust.