Whether you’re single, coupled up, or married, deciding how to hold title to your family home is one of the most critical decisions home buyers make. The effects of that decision may not be apparent for years, says The Washington Post in the recent article, “What you need to know about holding title to a home with a loved one.”
There are three primary ways to title property between spouses. Joint tenancy is the least common and typically must include the language “with right of survivorship and not as tenants in common.” Spouses typically acquire title as “tenants by the entireties,” which only applies to spouses in a limited number of states.
When a couple acquires a home before marriage, in some states, a premarital joint tenancy automatically becomes tenants by the entireties, when they marry. However, the drawback to joint tenancy, is that it’s possible for one spouse’s interest to be alienated by deed or by a judgment lien or bankruptcy. In some states, a joint tenancy can be partitioned, so that the ownership can be separated.
A surviving spouse doesn’t have to do anything upon the death of a spouse, depending on how they held title to their home. Ask your estate planning attorney about any changes to the title of the property, to be certain that title is set up this way.
There are many ways married couples or those in a civil union can hold title to a home. Joint tenancy with rights of survivorship again gives each owner the ability to own the entirety of the home upon the death of the co-owner. This transfer is automatic and doesn’t require any paperwork or legal processing.
Tenancy by the entireties gives the couple the same survivorship rights as a joint tenancy deed, but it also affords the couple certain protections against some creditors. It provides that debts entered into by one of the spouses, shouldn’t cause the loss of the home.
The third form of ownership is to hold title as tenants in common. Here, each owner has a specific percentage ownership interest in the home. When a co-owner dies, that person's share goes to the person designated in the will or by the laws in the state where the property’s located.
In addition to these three ways to hold title, there are also various estate planning trusts that can be used. Ask your estate planning attorney about what’s best for your specific situation.
Reference: The Washington Post (April 15, 2019) “What you need to know about holding title to a home with a loved one”