How Should I Hold Title to My Real Property?
Deciding how to hold title to real property is more than a simple real estate decision. How your property is titled can have ramifications for your estate plan and your heirs, as well as various other tax and legal consequences. It’s a decision to be carefully considered.
California allows numerous ways of titling property, including these more common ones:
- As a single person
- As an unmarried person
- As a married person or registered domestic partner, holding title as their sole and separate property
- As community property
- As community property with rights of survivorship
- As a joint tenancy
- As tenants in common
- As a title holding trust
- As an entity – including corporations, general partnerships, limited partnerships, limited liability companies, co-ownership by person or entity, and other legal entities
When a married couple (or registered domestic partners) obtain property, by California law the property is considered community property, unless stated and agreed to in writing that one half of the couple will not be listed on the title. This means that each half of the couple has the right to dispose of their half of the property under community property law. In the event that one partner passes away, their half of the property typically is deemed by probate court to the surviving spouse or partner unless the deceased spouse had previously disposed of their half of the property to someone other than the surviving spouse.
When “Rights of Survivorship” is added to the community property title, the surviving spouse will automatically assume ownership of the deceased spouse’s half of the property, without the property passing through probate court. As you can see, an important distinction exists between these two types of titles, even though they sound very much the same.
Joint tenancy allows two or more unmarried people (or non-registered domestic partners) to own property together, with rights of survivorship. A tenants in common title allows a similar co-ownership, but without rights of survivorship. In this case, the death of one owner will mean that their share of the property is subject to probate court proceedings, unless they had previously placed that ownership within a trust.
That brings us to trusts, which allow for property held within the trust to be passed to beneficiaries, without the need for probate court.
Various types of entity ownership also exist, usually regarding business partnerships, corporations, or other legal entities. The legal, tax, and estate ramifications for each of these types of title are complex and varied, and necessitate the guidance of a business attorney and planning team. Most especially, buyers should consider having an estate plan in place when buying property and making sure that how they hold title fits in with that plan. Failing to do so can result in high costs and delay when survivors can least afford those obstacles.
For information on any of these methods of titling property, call our real estate or estate planning attorneys. We can help you anticipate survivorship issues, as well as other potential consequences of your decision.