If you are a property owner, you should be well aware of the type of ownership you have and consult your estate planning attorney regarding the best ways to protect your estate's rights to the full value of your property.
Many people own property without truly understanding how they hold title to it – or the ramifications of the title that they hold. Not fully understanding your property ownership can have some dire consequences for your estate.
As a lesson take a case out of Greenwich, CT, that illustrates the dangers of tenants-in-common. Owning property with someone else is fairly common, and understanding how you own it is an important aspect of your estate planning. If you own property with someone else as tenants-in-common, when one of the tenants dies, their ownership interest passes on to their heirs and assigns. This means that their heirs automatically enter into a legal relationship with the surviving tenant. The options at this point usually include selling the property and splitting the proceeds; or one of the tenants buys-out the rights of the other(s).
In the case in Greenwich, a couple entered into the ownership of a home as tenants-in-common and split up some time before the woman’s death, with the woman living in the house and the boyfriend leaving. At the woman’s death, her ownership rights transferred to her heirs but – and you can see it coming – the boyfriend came back into the picture for his ownership rights as well. The ex-boyfriend persisted in arguing for a lower and lower valuation of the house, complicating efforts to partition and sell it … and also making it easier for him to buy out the woman’s heirs. In other words: the ownership fell into many bickering hands, each with an agenda, and none of whom necessarily intent on holding up the woman’s intentions.
Some people might say joint tenancy with rights of survivorship (JTWROS) is a simple answer to this problem. Well, not so fast there, either. In this particular case, joint tenancy would have left the property entirely to the surviving tenant, the ex-boyfriend; and the woman’s heirs would have been cut out entirely.
You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.
Est Reference: The Greenwich Citizen (July 20, 2011) “Another Estate Planning Nightmare: Tenant-in-Common"