Title of Property and Estate Planning

 Posted on June 11,2015 in Estate Planning

When a person is purchasing a home, it will need to be decided how he or she wants to hold title of the property at the closing. There are several options from which homeowners can choose; however, it is important to understand that any chosen option may affect what happens to that property in the event of the owner's death.

Each of the choices have both positive and negative aspects. The following provides a general overview of each option, but it is always beneficial to discuss the options with a qualified estate planning attorney prior to making any legal decision.

Sole Ownership

Sole ownership, also referred to as ownership in severalty, is a common choice for people who are single or wish to hole a property in their name only. If a person who is married purchases a property and chooses this option, his or her spouse will often sign a quitclaim deed waiving any rights of ownership to the property.

Properties which are titled as sole ownership are required to go through the probate process, which often involves expenses and delays in transfer.

Tenants in Common

Two or more owners, who are not married but purchase a property, will often hold the title as tenants in common. This is often the case for unmarried couples or investment partners. The percent of ownership of a property does not have to be equal, and is specified on the deed itself.

A co-owner is allowed to pass on his or her share of a property to anyone he or she chooses in the event of death. This is one benefit to this type of deed for married couples who have children from prior relationships and want to ensure their share of the property goes to their children.

The downside of this choice is that in some instances, such as when the tenancy in common is for a business partnership, the surviving partner could end up owning property with someone they do not know. Another downside is that if one partner wants to sell, and others do not, that partner can file a lawsuit to force the sale of the property.

Joint Tenancy

Just like tenants in common, joint tenancy is for when two or more people own a property. However, when one owner dies, his or her percentage of ownership is passed directly to the other owner or owners and not to the heirs of the deceased. The benefit of joint tenancy is that there is no probate required. A huge downside to this option is that one partner can give or sell his or her portion of ownership of the property without the approval of the other partner.

Living Trust

One of the best ways to hold title to a property is through a living trust. With a living trust, a person maintains control of their property, and upon their death, ownership of the property is transferred to their chosen beneficiaries. A living trust also avoids the costs and delays of probate.

Consult with an Illinois Estate Planning Attorney

If you are planning on purchasing a home or other property, it is important to contact an experienced DuPage County estate planning attorney in order to plan for what will happen to that property, as well as any other assets you have, should something happen to you.