Types of Property Ownership
The way you hold title to your property can have a dramatic impact on your estate planning process. Be sure you know how your land, home, bank accounts, stocks and bonds, life insurance policies, and pension plans are owned.
What You Should Know
You have five primary ways to hold title to your assets.
Sole ownership means you own the asset by yourself. You can sell the property or give it away without asking anyone’s permission. You can distribute the property after your death to your beneficiaries in a will, as long as you recognize your spouse’s marital interest. If you do not have a will, the property will go to your heirs as specified by provincial law.
Joint Tenancy with Rights of Survivorship (JTWROS)
JTWROS means you own an equal share of the property with one or more other persons. When you die, your ownership share in the property automatically passes to the other surviving owner(s). The surviving joint tenants get your share of the property even if you say in your will that you want that property to go to someone else.
Tenancy by the Entirety
Only husbands and wives have this form of joint ownership. In some provinces and states, only real estate can be held in tenancy by the entirety. Neither spouse can sell or mortgage property owned in this way without the other’s approval. When one spouse dies, the other spouse automatically receives full title.
Tenancy in Common (T/C)
Under T/C, you own shares in property with one or more persons, who are called tenants. When you die, your share passes directly to your heirs, or to others specified in your will. It does not pass to the other tenants. You can sell or give away your share as you wish without getting permission from the other tenants.
If you are married, your share of T/C property does not automatically go to your spouse. Instead, your portion of the property will go to your heirs. Who your heirs are will depend on state law and your family circumstances. Probate takes place even if you made it clear in a will that your spouse should inherit the property. Spouses who have children from previous marriages often use this form of title. It ensures that property passes as the parent intended.
Some provinces treat the property of married couples differently from the other provinces and states.
If you are married and live in a community property state, these property-ownership rules apply:
- If you acquired property before you were married, this property belongs to you alone even after you are married. Any property you accumulate during your marriage is considered to be community property. You and your spouse own an equal, one-half interest in this property. If you receive personal gifts or inheritance after you are married, that property continues to be owned separately by you.
Remember: Beneficiaries are the persons or organizations you mention in your will. Heirs are the people the law says will get your estate.