Forms of Owning Property

Property Title and Estate Plan

The way property was acquired and is titled are two vitally important considerations when establishing an estate plan. California is a “community property” state, meaning assets acquired during marriage are considered the combined property of both spouses. Aside from when and how the property was acquired, the legal title to the property will also determine the manner of transfer in the estate plan. Become familiar with the following terms.

Separate Property

Separate property is property owned individually, with no ownership right of the spouse. This property is usually acquired prior to marriage or received outside of the marriage, such as through inheritance. You are free to transfer this property at death in any way you want. However, property titled as a separate property asset may still be subject to spousal rights of community property depending on the funds used to acquire, pay off, improve, or maintain a separate property asset.

Joint Tenancy (may need to be specified as With Right of Survivorship)

Joint tenancy is a common way of property ownership in which each owner has an equal share in the property. The right of survivorship provides that at the death of one owner, the surviving owner retains ownership of the property and receives the property automatically by operation of law. It is important to note that property titled in a joint tenancy avoids probate but may not transfer their interest by a will or a trust.

Community Property

Legally married couples and registered domestic partners may take title to assets in the form of community property, meaning the asset is the combined property of both spouses with each having a one half interest in the property. The difference between community property and joint tenancy property is that the owners of a community property asset may transfer their half interest by will or trust and this interest does not avoid probate.

Community Property with Right of Survivorship

When assets are titled as community property with the right of survivorship, married couples are able to both avoid a probate proceeding to determine the transfer of the one half interest and directly transfer that interest to the surviving spouse.

Tenancy in Common

A tenancy in common is a method of owning property, usually a share in a condominium, with multiple additional owners. These interests are subject to probate and should be provided for in the will.

Continue: Demystifying the Probate Process