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Titling Property in an Estate Plan

MP900442457How property is titled is extremely important for an estate plan to work as desired. Titling determines the form of ownership, and that determines the transferability of the owner’s interest in the property. Property titling is not a do-it-yourself project.

One of the goals of titling property in an estate plan, is to create an “automatic” transfer of property that does not require probate, as discussed in a recent article from Pauls Valley Democrat, “Considerations in how to title your property.”

The first is Joint Tenancy with Right of Survivorship. This form of ownership passes title to the survivor immediately upon death and avoids probate. The transfer to the survivor happens automatically at the death of one of the joint owners.

To complete the transfer, one must confirm the death in the county records and effectively give notice that one joint tenant has died, and that the ownership is now in the survivor(s) name. This is usually accomplished, by having the survivor complete an Affidavit of Surviving Joint Tenant. The affidavit affirms the death of one party (in many cases a spouse), and the survivorship to title of the other party. This affidavit and a certified copy of the death certificate are filed with the county.

The survivor now owns the property as an individual. He or she can now sell or deed the property to others, including children, without a probate action to clear the title.

Next is Tenancy in Common. Ownership as a tenant in common gives an undivided interest in the whole property (like a third), which stands on its own and can be bought and sold. Tenancy in Common is used when two or more people want to keep their title separate from the other at death. Therefore, an undivided one-half owner has the right to use the entire property, including the right to benefit from one-half of the rent, lease or crop share. However, if several people own an undivided interest, control, usage and management can become complicated.

If, for some reason, a husband and wife own their property as tenants in common, and one spouse dies, his undivided interest remains as a part of his estate. In that case, his estate must be probated to provide a clear transfer of title to the surviving spouse or to other heirs.

It’s an added expense for the survivor that can be avoided, if another form of ownership is used.

This is a complex area of the law that requires the help of a seasoned estate planning attorney. People run into two problems with property titling: they try to figure it out for themselves and make expensive mistakes, or they fail to retitle property after completing an estate plan, thereby rendering the plan useless. An estate planning attorney will know how the ownership should be structured and the individuals need to follow up and retitle property, as directed by their attorney.

Reference: Pauls Valley (OK) Democrat (August 21, 2019) “Considerations in how to title your property”