Legacy Tips for Real Property Ownership

I have run a successful law center for over two decades helping clients with estate planning, probate, and trust administration.  Owners of real property need legal guidance to make sure that their legal affairs are in order.  I help clients avoid the common mistakes I’ve seen people make in taking title to California residential property.  This is because co-owners of real property have several options for taking and holding title to property.

When I discuss real property ownership with my clients, I find most do not know what the deed to their property looks like.  It is recommended to keep the original deeds in a secure place.  If you are unable to locate the deed to your property, you can visit your County Recorder’s office or their website to obtain a copy of the deed on file. 

If you own real property, it is very important to review your deeds.  If you are married or if you own real property jointly with another individual, you will need to review the title of your deed or have it reviewed by a professional.  The way you take title to property has advantages and limitations depending on what you want to accomplish.  As an estate planner, my primary focus is to determine what will happen to the real property upon your death or upon the death of a joint owner. 

The four common ways to take title is (1) tenancy in common; (2) joint tenancy; (3) community property; or (4) community property with right of survivorship.  The form of co-ownership that is most appropriate for a particular situation should be determined by knowledgeable real estate, estate planning, and tax professionals after careful consideration of the financial arrangement between the co-owners, their marital or domestic partnership status, their investment objectives, estate plans, and the tax implications of each form of ownership.

Joint Tenancy

A joint tenancy is an interest in property owned by two or more people in equal shares. Each joint tenant owns an undivided equal share of the entire property.  A joint tenancy interest cannot be disposed of by will or trust.  When one joint tenant dies, there is no probate court process because the surviving joint tenant owns the entire property.  The joint tenancy terminates automatically at the death of the prior joint owner.  Even though there is no court process, the surviving joint tenant still needs to clear title using an affidavit procedure which is a notarized document recorded in the county recorder’s office in the county where the real property is located.  The surviving joint tenant will need a will or trust in place to direct distribution of the real property upon their death.  The mistake I see with holding property in joint tenancy is an owner who wants to leave their ownership interest to their children but instead it goes to a surviving joint owner when they die.

Tenancy In Common

Unlike joint tenancy, tenancy-in-common interests need not be equal. For example, instead of owning the property as 50/50 owners, they may hold the property as 75/25 owners.  This is common to reflect the respective ownership of the joint owners whose contributions to the cost of purchasing the property are not equal.  Each joint tenant will need a will or trust in place to direct distribution of the real property upon their death because there is no right of survivorship when property is held this way.  The mistake I see with holding property as a tenant in common is that it forces a court probate process.  This mistake can be avoided if each owner holds their respective ownership in trust.

Community Property

Community property is property acquired by a married person during marriage while living in California.  With community property, as with a joint tenancy, spouses or registered domestic partners have equal interests during their marriage or domestic partnership.  Unlike joint tenancy, there is no right of survivorship which forces a probate court process when a joint owner dies.  The mistake I see with holding property as community property is that it forces a court probate process.  This mistake can be avoided if the deed is updated to read, “community property with right of survivorship” not just “community property.”

Community Property With Right of Survivorship

Community property is property acquired by a married person during marriage while living in California but for spouses who want to take title as community property with right of survivorship, the transfer document must include an express declaration that the property is community property with right of survivorship.  On the death of one of the spouses or registered domestic partners, the property passes to the survivor, without a court process just like joint tenancy.  The mistake I see with holding property as community property with right of survivorship is an owner who wants to leave their ownership interest to their children but instead it goes to a surviving joint owner when they die.