Title.

 

In California, title to real property may be held individuals in either Sole Ownership or in Co-Ownership (when held by two or more persons). In each instance, there are a number of variations as to exactly how title may be held. In this blog, we will discuss 8 of the most common situations.

Ways-to-hold-title

 

  1. Title may be held as a single man or woman who is not legally married
  2. You may hold title as an unmarried man or woman. This is different from holding title as a single man/woman because it refers to someone has has been legally divorced or who has dissolved a registered domestic partnership.
  3. If a married man/woman or a registered domestic partner desires to hold title in his or her name alone, he or she may do so with consent from the spouse/partner. Consent is given through a quitclaim deed that relinquishes all right or interest in the property. Thus, it is possible to hold sole and separate property, even if legally married.
  4. As defined in the California Civil Code, community property is property that has been acquired by either a husband or wife. When real property is conveyed to a married man or woman (or those in a domestic partnership), it becomes community property unless otherwise specified. This gives both spouses the right to dispose of exactly half of the property. If one spouse was to pass away, their half of the community property would automatically transfer to the surviving spouse. However, it is possible to leave one’s share of the property to a third party via a will.
  5. The Civil Code defines joint tenancy  as “owned by two or more persons in equal shares, by title created by a single will or transfer when expressly declared in the will or transfer to be joint tenancy.” Each share is equal. This style of holding title is made unique by the “right of survivorship” which declares that when a member hold joint tenancy dies, his or her interest in the property is automatically given to the survivor. A major advantage is that probate costs and delays are avoided when a joint tenant dies. However, it is important to note that property held in joint tenancy is not susceptible to being transferred to a third party by a will.
  6. Similar to joint tenancy, tenancy in common occurs when co-owners hold undivided interests, BUT these shares do not need to be equal or established at the same time. Another difference is that there is no right of survivorship, meaning that upon death each person may vest his or her interest to an heir.  A disadvantage to this is that the remaining tenant in common could wind up co-owning property with a stranger.
  7. Married couples and domestic partners have the ability to hold title as community property with right of survivorship, meaning that no share of the property may be given to anyone other than the surviving spouse or partner. This must be specified in writing that is signed by the grantees.
  8. Lastly, title to real property may be held in a living trust. In this scenario, a trustee would hold the legal and equitable title to the property for the beneficiary who is to retrain all of the rights and responsibilities. There are many advantages to a living trust, including avoidance of probate costs and delays. Further, until the death or disability of the trust creator, the property in the living trust is treated normally.

This chart from Fidelity helps to clarify:

chart

 

As a home owner, it is essential to not only familiarize yourself with the various ways to hold title, but also to be certain as to how you are holding title to your real property.

This knowledge is important because it may influence many tax and legal consequences during your life time and how (and whether) the property is transferred to your heirs when you die.

title-pic

There are significant tax and legal consequences that stem from how you hold title. We strongly encourage contacting an attorney and/or CPA for specific advice on how you should actually vest your title.

 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s