In most cases, your house is one of the most valuable assets you own; that’s why I routinely ask clients how their house is titled when they come in to discuss putting together or revising an estate plan.
Surprisingly, more often than not, clients don’t know.
Here are the five most common ways people usually hold title to their residence:
1. Sole ownership. For homeowners who are unmarried, title is usually held only that person’s name. Sometimes, when another person such as a parent or significant other cosigns on the loan to buy this house, either the cosigner or the lender may require that the cosigner also be “on the deed” as a joint titleholder.
If you have married since you bought your home, your new spouse does not automatically become a co-owner of your home; however, your new spouse would acquire a “dower interest” in the residence, and his or her signature would be required if you want to refinance or sell your property in the future. If you die and your property is still titled in your name as the sole owner, your residence would become a part of your estate and it (along with any other assets in your estate) would need to be probated. A judge’s signature on a Certificate of Transfer at the conclusion of your estate will convey the property to your heirs, assuming there are sufficient assets to pay all of the debts of your estate.
2. Tenants in common. If your deed says “to Mr. Smith and Mrs. Smith,” and there are no words after that to designate you deed as a survivorship tenancy, you have what is known as a tenancy in common. If your most recent deed was recorded prior to 1986, this is probably what you have. After then, tenancies in common were created for estate tax planning or more often, by oversight.
If you hold title with another person or persons as tenants in common and you die, your fractional interest will become part of your estate and your estate would need to be probated to administer it. Just as with sole ownership, title would be transferred to your heirs at the conclusion of your estate.
3. Survivorship tenancy. If your deed says “to Mr. Smith and Mrs. Smith, for their joint lives, remainder to the survivor of them,” you have a survivorship deed. For husbands and wives, based on current estate tax laws (and assuming they plan to remain married and are the primary beneficiaries of each others’ estates), this is probably the best way to hold title to your home.
In a survivorship tenancy, title passes to the survivor upon the death of one survivorship tenant to the other or others — you can have more than two people on a survivorship deed. When a survivorship tenant dies, an affidavit accompanied by a certified copy of the death certificate is filed in the Recorder’s Office where the real estate is located, and nothing further is required to transfer title. There may be other assets which still need to be probated with the Court, but your home will not be one of them.
4. Transfer on death. Ohio recently enacted legislation which allows owners of real estate (including sole owners, tenants in common or survivorship tenants) to file an affidavit designating a transfer on death beneficiary. The first version of the legislation provided that this would be done by a “transfer on death deed,” but that was later changed. If yours is a “transfer on death deed,” please let us know and we’ll review it to be sure it was done correctly at the time it was executed.
Like a survivorship tenancy, if you have one of these, no probate court approval is required when a person dies and a transfer on death designation affidavit has been filed; all that is required is an affidavit confirming the fact that a titleholder has passed. However, unlike a survivorship tenancy, a transfer on death beneficiary has no rights in the real estate until the person dies; and the person signing the affidavit can change beneficiaries or revoke them as often as desired.
5. Ownership in Trust. If you hold title as a trustee, there is an underlying trust agreement that specifies what you can and cannot do with the real estate. These were used primarily for estate planning purposes. In future articles, I’ll be discussing the pros and cons of trusts. For now, suffice to say that if you hold title to your home as a trustee, I recommend a checkup to see whether that still makes sense — or if it ever did.
How do I find out what I have? Of course, we are happy to retrieve a copy of your deed for you, but you can just as easily do it yourself. In most counties, you can look at your deed online and at no cost. Check out the “county offices” page on my website, which provides links to the different county recorder’s offices. Here are the links for the search pages in Franklin and Licking Counties:
Franklin County: http://recorderweb.co.franklin.oh.us/Rec/default.asp
Licking County: http://lcounty.com/recordings/
How do I know if what I have is what’s best for me? As I mentioned at the beginning of this article, a person’s home is frequently their most valuable asset. That’s why how you own your property — who controls it while you are alive, and who gets it and how after you pass — is usually the single most important consideration as you plan for the future.
Lawyers make more money when people don’t think about these things before someone dies. In my experience, mistakes happen most commonly:
- When non-lawyers write their own deeds.
- When title agencies make assumptions.
- When divorce lawyers dabble in real estate law, and
- When circumstances (personal and legal) have changed and people forget to make updates.
If you need help figuring out what you have, or figuring out whether what you have is right for you, give us a call.