Common Ways to Title Your Home

Transcript

Hi, my name is Chang Chae. I’m an ACTEC Fellow from Los Angeles, California and I’m here with Shaheen Imami, a Fellow from Chattanooga, Tennessee, and we’re going to talk about some common ways to title your home.

Is that a serious question, Shaheen?

Shaheen Imami:  Yes. The manner in which you title your home can impact your ownership rights, exposure to creditors, taxes and how your property passes when you die.

Considerations When Titling Your Home

Chang Chae:  Shaheen, what should I consider when titling my home?

Shaheen Imami:  Well, you should probably consider your marital status; your exposure to liability, depending on your kind of job or what you might do for investments – for you and anyone else you’re thinking of adding to the property; and whether you want to maintain control over your property — whether you want to reconvey it, sell it or just transfer it at some point in the future. Whether you intend to make a present gift that could trigger federal gift taxes. Whether your home is an integral part of your post-death estate plan. Is it part of the total amount to be left to beneficiaries, part of incapacity planning, or are you looking for Medicaid eligibility? You also might want to think about whether a transfer could trigger an acceleration clause under your promissory note that’s securing your house.

Chang Chae:  What are some typical ways to title your home?

Tenancy by the Entirety (TBE)

Shaheen Imami:  Well, there are several. Some depend on what your marital status is. For instance, if you’re married, the most common way to title your home is Tenancy by the Entirety (TBE). That endows survivorship rights, some creditor protection, and allows for transfers only with the consent of both spouses. Survivorship rights basically mean that whoever is left standing at the end, the last spouse to die, gets that property at the death of the first spouse. All they really need to do is record a death certificate with the register of deeds.

Joint Tenants with Rights of Survivorship (JTWROS) & Tenancy in Common (TIC)

Another way to do it, if you’re not married, or sometimes, I guess, if you are married – but typically it’s by non-married individuals – are Joint Tenants with Rights of Survivorship (JTWROS). Now, this allows for survivorship rights, just like Tenants by the Entireties, but it can be destroyed by a conveyance by one joint tenant and then it becomes a Tenancy in Common (TIC). So, one joint tenant conveys his or her interest in a joint piece of property but then it defaults to a Tenancy in Common where it’s every person for themselves and they have their own interest they can do what they want with. And that may not be what you want to accomplish. A variant on that is a Joint Tenancy with Full Rights of Survivorship. I know this exists in Michigan. I don’t know how many other states it exists in, but this is sort of a joint tenancy on steroids because it still allows for survivorship rights, but those can’t be destroyed by a single joint tenant. It can only be destroyed by the consent of all joint tenants. And the last and probably most common is a Tenancy in Common; and that means separate interest for each individual who is on the deed. And so, there are separate interests that could be conveyed by each one without the consent of the others. And what’s neat about this is that they don’t have to be equal interests. You can divvy up the property in whatever way that they want. But it’s pretty complicated, and there are a number of different options. So, you really want to talk to an estate planning professional to find out what’s best for you.

Chang, I know that you are in a community property state in California. Are there any special considerations for community property states?

Titling a Home in a Community Property State

Chang Chae:  Yes. There are. For married couples here in California, obviously, you can still hold it as Joint Tenants with Right of Survivorship. We don’t have Tenancy by the Entirety. What we do have is community property, and there are two ways in terms of community property that you can hold it. You can hold it just as community property, and there is another designation called Community Property with Right of Survivorship. Please note that either way you hold property, there may be capital gains tax issues in the manner in which you hold them. We do also have Transfer on Death Deeds, if you want to avoid probate but don’t want to create a trust. You can do that with the Transfer on Death Deed, and we also have registered domestic partners, who in California – they’re treated the same as married couples.

Shaheen Imami:  Chang, thanks. That was really helpful information for people who don’t live in community property states.

Chang Chae:  Likewise, Shaheen. I appreciate your time and the helpful information, and I hope everyone else finds this helpful as well. Thank you.