There are many different ways you can hold title to real property, like your house, especially if you have multiple people on the title. Let’s go through the various options and the pros and cons of each.
You can hold title in your own name, with no one else on the title. Even if you are married, it’s possible to own property in only your name, though you’ll have to take some steps to make it clear it’s your separate property. This is the easiest way to hold title; however, upon your death, the house will almost certainly have to go through probate, meaning the courts will oversee how the property is dealt with.
If you are married, you can hold title together as community property. The benefit here is that if one of you dies, the property automatically goes to the survivor with no reassessment. The drawback is that the house will likely have to go through probate when the second spouse dies.
You can also hold title as joint tenants. This is similar to community property, except that there can be more than two joint tenants, and you don’t have to be married to own in joint tenancy. As with community property, if a joint tenant dies, the surviving joint tenants inherit automatically with no reassessment. (Assuming everyone took title at the same time; while you can add joint tenants later, the reassessment rules in that situation can get complicated.) However, just like with community property, when the last joint tenant dies, the house will likely have to go through probate.
Another option is to hold title as tenants in common. Tenants in common each own a percentage of the property, and unlike joint tenancy, they can own in unequal shares (for example, someone can own thirty percent, and someone can own seventy percent of the property). This option is useful when people want to keep their ownership interest proportional to how much money they put into the property. It’s also useful when you don’t want the survivor to inherit since your share can be given to someone besides the surviving tenant(s) in common. However, this also means that each person’s share could be subject to probate on their death, whether or not the other tenant(s) in common are still living. Your share may or may not be reassessed, depending on the circumstances.
Corporations can also hold title to property; I know some people who choose to incorporate and hold title within the corporation, particularly if the property is a rental. This is useful for reducing liability, and the corporation itself would not be subject to probate; however, your ownership interest in the corporation could potentially need to go through the Probate Court. Put another way, the Probate Court would not be running the corporation; they would simply be deciding who the new owner(s) will be. Since tax laws for corporations are tricky, I suggest you speak to a business attorney to determine how this might impact your property taxes.
Last but not least, you could put the property into a trust. This is often the best approach – while you are alive, the property is taxed as though you still owned it in your own name. Upon your death, the property will not be subject to probate but can either be sold or passed on to your designated beneficiaries, as your trust allows. In most cases, this gives you the most flexibility and the best tax outcome, which is why this is recommended for most homeowners.
Do you have questions about the best approach to holding title to real property? Need a review of your trust to make sure it’s up to date in 2025? To learn more about real property in estate planning, please get in touch with me at kaway@kawaylaw.com.
