There are a number of ways people can own property together. It is important to understand the differences. Here’s an explanation:
Tenants in common. The most common type of ownership is as tenants in common. This means if one of the owners dies, his or her share of the property goes to his or her probate estate rather than to the other owners. However, if the deceased owner has done some estate planning, he or she can have their share of the real estate avoid probate.
Joint tenants. If the deed for the property says two or more people took title to the property as joint tenants, that means if one of the owners dies, his or her share goes to the other owners “for free,” so to speak. The heirs of the deceased owner would receive nothing.
For example, if three owners each put in $100,000 to purchase a parcel of land and take title on the deed as joint tenants, and one of them dies, the other two owners become the sole owners of the parcel of land and do not owe the deceased owner’s heirs anything. This works the same way for bank accounts. Sometimes, a son or daughter may become an owner on an elderly parent’s bank accounts as a joint tenant. This would mean that if either the child or the parent dies, the funds in the joint bank account go solely to the survivor.
Survivorship marital property. In Wisconsin, most people will own their house or real estate purchased with their spouse while married as survivorship marital property. This is only available to married couples. This works like joint tenancy, in that when one spouse dies, that real estate goes to the surviving spouse “for free.”
For people who are on their second marriage, they may not want to own real estate as survivorship marital property because they may desire that when one spouse dies, his or her share should go to the deceased spouse’s kids from the first marriage. Husbands and wives can own land as tenants in common.
Tenancy by the entirety. About half the states (not Wisconsin) allow ownership of real estate as tenancy by the entirety for married couples. This is, again, for married couples only and works similar to a joint tenancy again, in that when one spouse dies, his or her share goes to the living spouse “for free.”
If you own property as a joint tenant and no longer desire to and would prefer instead to own property as tenants in common, the easiest way to accomplish that is to have all owners of the property sign a new deed indicating that ownership is as tenants in common. If only one owner desires to change from a joint tenancy to a tenants in common, he is not able to so unless he transfers his ownership to a third party.
This author’s understanding is that one spouse does not have the power to sever property owned as survivorship marital property to tenants in common other than filing for divorce, annulment or legal separation.
It should be noted that if a deed does not indicate the type of ownership two or more people own property as, then the ownership is as tenants in common. Ownership of property is equal unless the deed or other agreement of the owners specifies otherwise. As you can see, it is important to understand how your real estate is held.
Halbach is a partner in the agricultural law firm o Twohig, Rietbrock, Schneider and Halbach. Call him at 920-849-4999.