Garland Law Offices, P.A.

How Do I Title Our Property as Tenants in Common?

“This method is actually the default ownership method in Oklahoma, i.e. if you simply title ownership as “joint ownership” the form of ownership assumed will be as a tenant in common.”

There are several ways to hold property. They include ownership as an individual and property held as joint tenants with right of survivorship. A third major form of ownership is “Tenancy in Common.”

The Pauls Valley Democrat says in its article “How to title your property as tenants in common” that ownership as a tenant in common provides an undivided interest in the whole property (i.e., an undivided one-half, one-third, etc.). This interest in property stands on its own and can be bought and sold. This form of title is the best option for two or more people who want to keep their title separate during life and after death.

In practice, this ownership is a bit theoretical because an undivided interest provides a partial ownership of the entire property—but not a total ownership of any part of the property. Therefore, an undivided one-half owner has the right to use the entire property, including the right to benefit from one-half of the rent, lease, or crop share.

When several individuals own an undivided interest, the control, usage, and management can become complex and troublesome, especially when one of the co-tenants spends their own money to improve the property, which benefits the other co-tenants.

Tenancy in common offers a benefit because the interest is transferable and can be sold or otherwise transferred, without affecting the other owners. However, the value of a partial ownership is decreased in value, because of the potential limitations on sharing with the other owners.

The following is an issue that can occur, if a husband and wife own their property as tenants in common. If one spouse dies, his or her undivided interest remains as a part of the estate. As a result, his or her estate has to be probated for a clear transfer of title to the surviving spouse or to other heirs. It’s an expense for the survivor that could have been avoided, if another form of ownership were implemented.

Another thought with co-tenancy is a debt of one of the co-owners. The death of one of the co-tenants does not terminate the ability of his or her creditors to file a claim against the property as a part of a probate.

Each owner has the right to sue to split the property in a suit for partition, and the other owners may at any time face such action. Typically, real property can’t be fairly split into equal pieces. Thus, there’s a sale of the property by the court and then a split of the money after the sale. This isn’t a good option in many cases. Plan in advance, rather than react after the fact.

Reference: Pauls Valley Democrat (October 2, 2019) “How to title your property as tenants in common”

How Should I Title Assets For My Estate Plan to Work?

“Titling assets properly is the very first step to protect your assets and ensure that they can be passed onto your loved ones efficiently, especially when you share ownership of the assets with another person.”

The way property is titled can mean different probate consequences. Reflector.com’s recent article, “Joint-ownership property titling can avoid costly probate process” discusses the five common methods of joint-ownership property titling.

Joint tenancy. In this situation, two or more persons own equal shares of a property. The owners don’t have to be related or married to each other. When the asset is owned jointly by spouses, the asset is passed onto the surviving spouse at the death of the other spouse. However, when the asset is owned jointly by unmarried people, the entire value of the asset is included in the deceased’s estate and is subject to probate. Therefore, joint tenancy might not be the best property titling method, if you want to share joint ownership with somebody other than your spouse. If one of the owners doesn’t honor his/her financial obligations, the asset can be subject to the pursuit of creditors up to that owner’s respective ownership percentage.

Tenancy in common. This is similar to joint tenancy in many ways.  However, the big difference between joint tenancy and tenancy in common, is that the relative ownership percentages of the tenants in common may differ. One owner can own 25% of the asset, while the other can own the other 75%. If one tenant in common dies, the percentage of her ownership in the asset is included in her estate and is subject to probate.

JTWROS. Joint Tenancy with Rights of Survivorship (JTWROS) means that the right of survivorship distinguishes JTWROS from joint tenancy and tenancy in common. When the owner dies, her share of the ownership is transferred to the surviving joint owner automatically by operation of law without probate. Each joint owner also has the right to transfer or sell his or her interest in the property without the consent of the other joint owner, and thereby destroy the JTWROS status. Were this to happen, it would convert a JTWROS into a tenancy in common.

Tenancy by entirety is a JTWROS between spouses. However, neither spouse can transfer or sell their interest, without the consent of the other spouse. Tenancy by entirety is better protection from the creditors against one spouse than a JTWROS. That is because the property isn’t owned by either the husband or the wife but by the marital entity.

Community property. This is recognized in Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Community property provides that married couples own an equal and undivided interest in all properties accumulated while they are married. Each spouse owns half of the value of the community property, and either spouse can transfer or sell one half of the property. When one spouse dies, one-half of the value of the community property is included in the probate estate and gross estate of the deceased spouse.

There are different methods of joint-ownership property titling. Select the right method with the help of your estate planning attorney to avoid a future costly probate process.

Reference: Reflector.com (December 2, 2018) “Joint-ownership property titling can avoid costly probate process”

Here's What Happens When You Die Without A Will

“Many never think about the possibility of dying without a will, but this is still a legitimate question to ask. When a person dies without leaving documentation of their wishes, or makes a will which is not legally valid, everything goes out the window.”

The rules of intestacy govern how the estate is distributed. These rules typically dictate that only married or civil partners and certain close relatives may inherit the assets left behind.

Influencive’s recent article looks at what happens, if you die without a will. The article, “How Estate Planning Works for Those Who Die Without a Will,” explains that if a person dies without a valid will in place, things may get tricky pretty fast. Some common questions include: What becomes of a mortgage, if the mortgagee dies? What happens to a home, when the owner dies? What becomes of a person’s bank account? How is next of kin determined?

When a property owner with a mortgage dies, the promissory note allows the creditor to get paid from the estate. If the estate can’t fully repay the mortgage, the lender may begin the process of selling the property. When a sole homeowner dies, the home is transferred according to the will. If he or she dies without a will, it is transferred according to state intestacy laws. Those laws determine who qualifies as next of kin and thereby inherits the estate.

If a couple jointly owns their home and were joint tenants when the first partner dies, the surviving tenant will inherit the other’s share of the property.  However, if the partners are tenants in common, the surviving partner doesn’t automatically inherit the other person’s share.

Typically, there are four primary requirements that form the foundation of a valid will:

• The will must have been drafted with testamentary intent;
• The testator must have testamentary capacity;
• The will must have been drafted without fraud, duress, or mistake; and
• The will must have been duly executed.

Married and civil partners inherit assets following the rules of intestacy, if they are legally married, or in a civil partnership, when they die. If you are divorced, you won’t inherit anything.

A better plan is to sit down with an estate planning attorney and create the documents that go into an estate plan, including a will, powers of attorney and a health care proxy.

Reference: Influencive (July 10, 2018) “How Estate Planning Works for Those Who Die Without a Will”