The process of dealing with joint property is a legal procedure for transferring ownership of assets from the name of the deceased person to the names of the beneficiaries. It also ensures that creditors can file claims for payments from the deceased’s estate and that final tax returns are filed, including an estate tax return if the inheritance is large enough.
All these processes can take some time and involve some costs, so many people plan their estates to try to avoid joint property transfers as much as possible. Unfortunately, joint property estates typically do not achieve this goal unless additional steps are taken.
The Reason for the Necessity of Joint Property Transfer
Joint property transfer is a legal process for transferring ownership of assets from the name of the deceased person to the names of the beneficiaries. It also ensures that creditors can file claims for payments from the deceased’s estate, and that final tax returns are filed, including an estate tax return if the inheritance is large enough.
Definition of Joint Property
Joint property is a form of ownership between two or more persons. The co-owners do not have to have equal shares in the property – one person can hold a 25% share in the property while the other holds a 75% share. Both are entitled to full use of the entire home.
Joint Ownership vs. Joint Tenancy
Joint ownership is another common way to own property, and this method avoids joint property transfer because it carries rights of survivorship.
Real Estate Registered in the Name of the Deceased Only
This situation may initially seem impossible. Joint property cannot enjoy such a status – but the deceased’s share in joint property may be registered solely in their name.
If the Deceased Had a Revocable Living Trust
The deceased’s share of the home will pass to the beneficiary outside of the joint property transfer if they created a revocable living trust and registered their share of the property in the name of the trust. In this case, the deceased tenant’s share will go directly to the beneficiaries named in the trust documents without court involvement.
Mortgage Considerations
The mortgage is a debt, and the joint property transfer process also addresses the deceased’s debts, but the deceased tenant will not be liable for paying the mortgage if the loan is in joint names. In this case, consumer protection law supersedes joint property transfer law. Both tenants were contractually obligated to pay the mortgage, so the obligation of the entire contract automatically shifts to the surviving tenant under the law if only one of them survives.
Options for Tenants
Of course, you do not want to lose your home if the other joint tenant passes away, but you may also not want to own the property or live with someone who inherits the other tenant’s share. You have several options:
- You may be able to reach an agreement with the new tenant to sell the property if you are not obliged to live in it yourself. Everyone can take their rightful share from the sale proceeds based on their ownership shares.
- You may be able to buy the new tenant’s share or find someone else willing to do so.
- You can also file what is known as a “partition lawsuit” in court, where you ask the judge to force the sale of the property and distribute your respective ownership shares from the sale proceeds.
Frequently Asked Questions
Is there another way to avoid joint property transfer besides using a living trust?
Some states, including California, provide revocable transfer-on-death deeds that allow you to transfer your share of the property to your partner without the need for joint property transfer. Joint property estates allow you to transfer your share of ownership during your life or after your death, so you can use this type of deed if your state allows it. Check with a local attorney to confirm.
Is there…
Can the division of joint property force the sale of the property if the surviving tenant does not wish to sell?
The division of joint property may lead to the forced sale of the property either by inheritance or by the creditor if there are insufficient funds in the estate to settle the mortgage balance, and the estate is responsible for paying it.
Source: https://www.thebalancemoney.com/who-inherits-property-owned-as-tenants-in-common-3505229
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