Property ownership is an important matter that individuals should understand before purchasing or owning real estate. There are only three ways to own property: in sole name, as tenants in common with others, or by rights of contract. In this article, we will review a summary of what each type of ownership means and what will happen to the property after your death.
Sole Ownership
Sole ownership refers to property that is owned solely in your name without any other owners or designated beneficiaries. After your death, property that you own in sole name will typically have to go through probate to get it out of your name and transfer it to the names of your loved ones.
Types of Joint Ownership
Joint tenancy with right of survivorship (JTWROS): In joint tenancy with right of survivorship, all owners hold an equal right to the property. In other words, any owner can withdraw funds from the account without the knowledge or permission of the other owners. However, in the case of real estate owned jointly in most states, the property cannot be sold or mortgaged without the consent of all owners. When one of the joint owners dies, ownership of the property automatically transfers to the surviving joint owners without the need for probate. Generally, all that surviving owners need to do is present the death certificate or record it in the appropriate land records to substantiate their ownership of the property.
Tenancy by the entirety: Tenancy by the entirety is a type of joint ownership with rights of survivorship recognized in some states and can only exist between married couples. Either spouse can withdraw funds from the account without the knowledge or permission of the other spouse. However, in the case of real estate, in most states, the property cannot be sold or mortgaged without the consent of both spouses. When one spouse dies, ownership of the property automatically transfers to the surviving spouse without the need for probate. Generally, all that the surviving spouse needs to do is present the death certificate or record it in the appropriate land records to confirm ownership of the property. Tenancy by the entirety is often abbreviated as TBE.
Community Property
Community property is a type of joint ownership recognized in some states and can only exist between married couples. The ownership rights of each spouse in community property are determined by the specific laws of the state.
Ownership by Rights of Contract
Ownership by rights of contract (also known as title by contract) encompasses payable-on-death (POD) accounts, transfer-on-death (TOD) accounts and deeds, in-trust-for (ITF) accounts, Totten trusts, life insurance, retirement accounts including individual retirement accounts (IRAs) and 401(k) plans, life insurance, revocable living trusts, and irrevocable living trusts.
The property owner retains full control over the property during their lifetime (except for living property – check the applicable state laws). After their death, the property passes outside of probate to the beneficiaries designated by the property owner. Generally, the beneficiary will need to present the death certificate or have it recorded in the appropriate land records to claim ownership of the property.
Source: https://www.thebalancemoney.com/overview-of-types-of-property-ownership-3505420
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