Methods of Holding Title
|Tenancy in Common||
|Community Property||Tenancy in Partnership||Community Property w/Rights of Survivorship|
|Parties||Any number of persons (can be husband and wife)||Any number of persons (can be husband and wife)||Only husband and wife||Only partners (any number)||Only husband and wife|
|Division||Ownership can be divided into any number of interests, equal or unequal||Ownership interests cannot be divided||Ownership interests are equal||Ownership interest is in relation to interest in partnership||Ownership interests are equal|
|Title||Each co-owner has a separate legal title to his/her undivided interest||There is only one title to the whole property||Title in the "community" (similar to title being in a partnership)||Title is in the "partnership"||Title in the "community" (similar to title being in a partnership)|
|Possession||Equal right of possession||Equal right of possession||Equal right of possession||Equal right of possession||Equal right of possession|
|Conveyance||Each co-owner's interest may be conveyed separately by its owner||Conveyance by one co-owner without the other's breaks the joint tenancy||Both co-owners must join in conveyance of the real property||Any authorized partner may convey whole partnership property. Consent of co-partners needed for transfer||Both co-owners must join in conveyance of the real property|
|Purchaser's Status||Purchaser becomes a tenant in common with the other co-owners||Purchaser becomes a tenant in common with the other co-owners||Purchaser can only acquire whole title of community, cannot acquire a part of it||Purchaser can only acquire the whole title||Purchaser can only acquire whole title of community, cannot acquire a part of it|
|Death||On co-owner's death, his/her interest passes by will to his/her devisees or heirs. No survivor's interest||On co-owner's death, his/her interest ends and cannot be willed. Survivor owns the property by survivorship||On co-owner's death, it goes to survivor in severalty. It goes by will to descendant's devisee or survivor by succession||On partner's death, his/her interest passes to the surviving partner pending liquidation of the partnership. Share of the deceased partner goes to their estate||On co-owner's death, his/her interest ends and cannot be willed. Survivor owns the property by survivorship|
|Successor's Status||Devisees or heirs become tenants in common||Last survivor owns property in severalty||If passing by will, tenancy in common between devisee and survivor results||Heirs or devisees have rights in partnership interest, but not specific property||Last survivor owns property in severalty|
|Creditors||Co-owner's interest may be sold on execution sale to satisfy his/her creditor||Creditor becomes a tenant in common. Co-owner's interest may be sold on execution sale to satisfy creditor. Joint tenancy is broken. Creditor becomes tenant in common||Co-owner's interest cannot be seized and sold separately. The whole property may be sold to satisfy debts of either husband or wife||Partner's interest cannot be seized and sold separately by their personal creditor, but their share of profits may be obtained by a personal creditor. Whole property may be sold on execution sale to satisfy partnership creditor||Co-owner's interest cannot be seized and sold separately. The whole property may be sold to satisfy debts of either husband or wife|
|Presumption||Favored in doubtful cases except husband and wife||Must be expressly stated and properly formed. Not favored||Strong presumption that property acquired by husband and wife is community||Arises only by virtue of partnership status in property placed in partnership||Strong presumption that property acquired by husband and wife is community|
The above table is provided for general information only. The holding of title (vesting) has certain significant legal and/or tax consequences and you are encouraged to obtain advice from an attorney or other qualified professional in this matter.
Beside real estate market values changing last year, there is another significant change that can effect many married persons. It is a new option for holding title to real estate. Before I go any further , understand I am a real estate professional, not a tax adviser or an attorney. For more legal information consult with your tax advisor or got to the web site with attorneys, Weiss & Weissman, Inc., who specialize in real estate law at: www.wwlaw.com. You can get more information by visiting their site or contacting them directly.
Every couple's tax and legal situation is different. The point of this article is not to advise you, but rather to make you aware that there are some new options, as of mid-year 2001. In the past, a married couple usually chose either Joint Tenants, or Community Property. Each method has advantages and disadvantages. Unfortunately, at the times one needs stress the least, at the death of a spouse, I have witnessed some disastrous results form incorrect methods of holding title.
In my layman's terms, when property was held as Joint Tenants, the property went right to the spouse, or surviving tenant. The disadvantages to this holding can be in twofold: 1) a joint tenant can deed out to another without notification and 2) the tax consequences can be punitive compared property held as Community Property.
On the other hand, while there can be tax advantages if held as Community Property, there is also the need for a will. If no will exists, it can give minor children ownership rights that prevent the remaining spouse form being able to convey the property in order to care for those very same minor children. And Community Property, with out right of survivorship can be willed to others than the spouse.
The new method of holding title for married person is Community Property with Right of Survivorship. Depending upon you entire legal and financial situation, this may create tax advantages without needing a formal will. Mind you I'm not advising to go without a will, it's just that we're all human and sometimes those things fall to the bottom of the list. This method may be a good solution until you set up a living trust or one of the other estate options suitable to the estate of you and your spouse
After reviewing the above table, make an appointment with your legal or tax advisor to find out if this new method could be advantageous to you and your spouse.