It is important to know how each of your assets is owned. There are various ways to own property and the way it is owned may affect taxes, legal relationships and the transferability of the asset.
Property owned by one person is called Sole Survivorship. The name on the legal document would be that person alone. At death the property becomes part of the probatable estate and passes to the persons designated in the owner’s will. You can own any type of asset in your individual name whether it be stocks, real estate, bank accounts or vehicles.
Another way to own property is Joint Tenancy with Right of Survivorship. The property is owned jointly by both tenants and at the death of the first tenant the survivor then owns the property. At death the property automatically passes to the surviving joint tenant. If the property is held jointly by husband and wife then in some states it is called Tenants by the Entirety. Joint Tenancy with Right of Survivorship in most states can be owned by any individuals jointly not just husband and wife.
Another way to own property is Tenants in Common. Tenancy in Common is when more SON OWI than one person owns property together but without the right of survivorship. You may have any number of Tenants in Common owning one piece of property. As an example, if there are three owners then each person owns one-third of the entire property. The fractional interest is treated as being owned by that individual.
A tenant in common can sell or transfer their own interest without the consent of the other tenants, but only their portion of the ownership, not the entire asset.
Some states are known as Community Property States, sometimes also called Marital Property States. This type of ownership refers to property that is acquired by husband and wife during marriage. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin are community property states. On the death of one of the spouses, one-half of the community property belongs to the surviving spouse and one-half is included in the decedent’s estate.
Any property owned by either spouse prior to marriage or acquired after marriage by gift or inheritance is considered separate property and not marital property. As you can see, it is important to not only understand the various ways to own property but to make sure when you purchase or receive a piece of property that it is properly designated in the type of ownership desired.