Creating a successful estate plan requires you to do more than simply decide how your estate assets are to be distributed after you are gone. It also requires you to protect those assets while you are alive. Fortunately, there is a wide range of estate planning tools and strategies that can help with asset protection. The Port St. Lucie asset protection attorneys at Kulas & Crawford explain why you need to be careful how you co-own property.
Why Does It Matter How Property Is Titled?
The way jointly held property is titled is not something most people think much about – but they should. Not only can the type of joint title you choose impact your own rights to the property, but it can also potentially subject your interest to the property to unnecessary risks.
Joint Ownership of Real Property in Florida
Joint ownership of real property is governed by state law, meaning each state decides what types of joint ownership will be recognized within the state. At the time you purchase real property, you should be asked which type of joint title you plan to use if you purchased the property with one or more additional owners. The types of joint ownership recognized by the State of Florida, along with some important features of each type, include:
- Tenants in Common. In Florida, tenancy in common is the default type of joint ownership, meaning if the ownership instrument is silent with regard to the type of joint ownership, the law will presume you hold it as tenants in common. With a tenancy in common, each owner owns a separate fractional share of undivided property. In addition, there is no limit to the number of owners and owners can own differing shares of the property. For example, you might own property with your two adult children wherein you own 50 percent of the property and they each own 25 percent. As a tenant in common you can sell, mortgage, transfer, or assign your share of the property without the consent of the other owners. Your interest in the property will become part of your probate estate after your death if you hold the property as a tenant in common. Both features can put your interest in the property at risk.
- Joint Tenants with Rights of Survivorship. The most important benefit, for most people, to holding property as joint tenants with rights of survivorship (JTWRS) is that your interest in the property does not become part of your probate estate after your death. Instead, your interest passes automatically to the surviving owner(s) outside of the probate process. Along with making it much easier to pass your ownership interest to loved ones, this feature also means the value of your interest in the property is not included for federal gift and estate tax purposes One downside to holding property as JTWRS is that an owners cannot sell, transfer, mortgage, or otherwise encumber the property without the consent of the other owner(s). The other disadvantage to owning property as JTWRS is that creditors of one owner can still reach the property. If you wish to create a joint tenancy with rights of survivorship, Florida Statute 689.15, requires that the “joint tenancy with right of survivorship” be clearly identified on the ownership instrument.
- Tenants by the Entirety. Married couples under Florida law are allowed to co-own residential real estate as “tenants by the entirety.” Your spouse must agree to a conveyance if you hold property as tenants by the entireties. When either spouse passes away, the surviving spouse automatically becomes full owner of the entire interest in the real estate because the right of survivorship is inherent in this type of joint ownership. By far the biggest benefit, however, to titling property as tenants by the entirety is that the tenancy cannot be divided to repay debts of one owner. In other words, a creditor of one spouse cannot get to the property.
Contact Port St. Lucie Asset Protection Attorneys
To learn more, please download our FREE solid estate plan checklist. If you have additional questions or concerns about how to title your jointly held property, please contact the experienced Port St. Lucie asset protection attorneys at Kulas Law Group by calling (772) 398-0720 to schedule an appointment.
