If you own co-own property, you will need to create an ownership document, such as a deed or title, when you purchase the property. When you do that, you will need to decide how you want to legally hold title to the property. You may not have given the way in which your assets are titled much thought; however, it can matter for several reasons. To help you better understand, the Staten Island asset protection planning attorneys at O’Reilly Law explain how the way you title jointly owned property matters.
Types of Joint Title in New York
Each state determines how title to property may be held by two or more owners. For this reason, the types of joint title may be slightly different from one state to the next; however, the options available impact things such as what happens to an owner’s interest upon his/her death and whether creditors can pursue an owner’s interest for a debt owed to the creditor. In the State of New York, jointly owned property can be titled as:
- Tenants in Common. Each owner owns an undivided interest in the whole property, which means they can sell or otherwise transfer or encumber (borrow against) their own interest in the property. In New York, whenever more than one person buys or inherits property together, it is automatically held as tenants in common, unless they are husband and wife. If a tenant in common dies, the deceased person’s interest passes to their heirs or to the person specified in the terms of the decedent’s Will. In practical terms, this means that the decedent’s interest in the property becomes part of the probate process instead of passing directly and automatically to the co-owner(s).
- Joint Tenants. Each owner owns an undivided interest in the whole property, but if the interest is sold, the joint tenancy ends and the owners become tenants in common. If one of the joint tenants dies, the deceased person’s interest automatically goes to the other joint tenant. This is known as a “right of survivorship.” Some states require that the right of survivorship must be stated to exist (typically referred to as “JTROS”) If you own property as joint tenants with rights of survivorship it means that upon the death of one owner, his/her interest in the property transfers automatically, outside of the probate process, to the surviving owner(s). A joint tenant can ask a court to partition the property if he/she no longer wishes to own the property jointly.
- Tenants by the Entirety. This is a special joint tenancy for married persons. It has the same rights as joint tenants, with a right of survivorship, but there is no right to partition or transfer the property without the consent of both parties.
As you can see, the way in which you hold title to property can have a significant impact on whether that property is accessible to creditors, both yours and the other owners, as well as what happens to that property in the event of your death. If you want the ability to share or encumber your interest in the property without consent of the co-owner(s), titling the property as tenants in common likely makes the most sense. If you want your interest in the property to avoid probate and pass directly to the co-owner(s) you need to title it as joint tenants or as tenants by the entirety.
Contact Staten Island Asset Protection Planning Attorneys
For additional information, please join us for an upcoming FREE online seminar. If you have questions or concerns about the best way to title your jointly owned property, contact the experienced trust and estate planning attorneys at O’Reilly Law by calling 332-456-0500.