Before you buy your home, have you given much — or any — thought about how you’ll title it?
“Many homeowners don’t think about it,” says Matthew Drewes, an attorney at Thomsen & Nybeck in Bloomington, Minn. “Some don’t even realize there are options until they show up at closing and are asked how they’d like their deed to read. At that point, they’re pretty much on their own. Title companies are reluctant to give advice, and frequently you’re dealing with a closer who’s not well-versed in title issues.”
How you title your home shouldn’t be an afterthought. “It’s important so that your interest in your property goes where you want it to go at your death,” says Nancy Polomis, chair of the real-estate-development department at Hellmuth & Johnson PLLC in Eden Prairie, Minn.
Here’s a primer on common ways to hold title to your home, along with tips for figuring out which is best for you.
There are several common ways to hold title to your home. You can hold it solely in your name, in joint tenancy or as tenants in common.
Sole ownership is just what it sounds like: You hold the title in your name alone, even if you own the property with other people. The second option — formally called joint tenancy with the right of survivorship — is a way to hold the title in more than one person’s name.
“Joint tenancy means that you and I own the property together, and if one of us dies, the other gets it without the property passing through probate,” Polomis says. “The survivor files an affidavit saying the other titleholder is dead, attaches the death certificate and gets the property.”
Tenancy in common is another method for holding title in several names.
“With tenancy in common, you and I own the property together,” Polomis says. “But upon my death, my interest is distributed according to my will or, if I don’t have a will, according to state law.”
Some states have variations on joint tenancy.
“In Florida, when you take title as husband and wife, it’s deemed a tenancy by the entirety,” says Roberto Blanch, an attorney at Siegfried, Rivera, Lerner, De La Torre & Sobel PA in Coral Gables, Fla.
Tenancy by the entirety is joint tenancy with twists. You can end a joint tenancy simply by conveying your interest in the property to another person. With tenancy by the entirety, however, you can’t transfer your interest unless you and your spouse participate in the transfer.
Carefully evaluate which form of title is right for your situation.
“Ask yourself: Who do I want to end up with my interest in this property?” Polomis says. “Do I want it to be the person with whom I own it or someone else?”
If you’re married and want your interest to pass to your spouse upon your death, joint tenancy is probably the best solution. But there are drawbacks.
“Maybe you or your husband have credit issues,” Polomis says. “You might not want the person with debts to be on the title at all.”
That may also be true if one spouse has a high-liability occupation.
“If one of you is a doctor or lawyer with the risk of malpractice claims, you may want the spouse not at risk to own the property,” Drewes says.
Joint tenancy also may be unwise if you have a complicated family history. Perhaps you’re married but not for the first time, and you have children from a previous marriage.
“You may want to title your home as tenants in common so that when you pass, your interest goes to the beneficiaries of your estate,” Blanch says.
That reasoning may also be sound if you’re divorced with children but own a home with a new partner. — SHNS
