TAKING TITLE EXPLAINED: COMMON VESTING OPTIONS DEFINED©
The following is for informational purposes only. How your title is vested should be based on your attorney’s and, or accountant’s advice. Below are some common vesting options:
Tenancy In Common
The right of survivorship does not exist when the title is vested as tenants in common. The deceased’s interest will be probated upon the death of a spouse or other individual tenant in common and then distributed by will, or where no will exists, by intestate succession to family members. Tenants in common may also hold unequal interest in the property.
Joint Tenants
As joint tenants, each party owns undivided equal shares in the property. When either party dies, the title passes to the surviving joint tenant without the need for probate. Recording a certified copy of the death certificate and an “Affidavit of Death of Joint Tenant” clears the title of the deceased’s interest.
Community Property
Community property is property acquired by a husband and wife (or domestic partner) when not acquired as the separate property of either spouse/domestic partner. Vesting a husband’s and wife’s (or domestic partner’s) community property as “community property” provides no rights of survivorship, as does joint tenancy. Also, a couple’s assets vested as community property must be probated. Through a will, a husband, wife, or domestic partner may leave their one-half share of the community property to whomever they elect.
Community Property With Right of Survivorship
When one spouse or domestic partner dies, the property will pass to the survivor without administration. Just like joint tenancy, the property will receive a full step-up basis. Thus, this newer form of taking title has incorporated the benefits of both previous forms of title to the surviving spouse (or domestic partner) without the negative aspects.
As you can see, the decisions regarding how to take title can have dramatic consequences. After carefully considering their needs, the buyer can determine which vesting option is best.
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