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Understanding Real Estate Ownership and Transfer

So you own your home and you think that it will be transferred to your family upon your passing without going to court. But is that really the case?  What does all of this mean?

A house that is owned by spouses often makes such a reference (i.e. John Smith and his wife, Jane Smith) or has the designation as “tenants by the entirety”.  This type of ownership means that the surviving spouse will automatically take the full ownership of the property upon the passing of the first spouse.  No change to the deed is necessary.

However, this designation does not automatically transfer the property to the surviving children upon the passing of the surviving spouse.  You would have to take additional steps, either through a trust or will, to make sure that your home is transferred to the beneficiary that you designate.

Let’s look at a few different types of typical deed language and what each means:

Joint with Right of Survivorship (JTWROS)

This is similar to that of tenants by the entirety, but in this case, the owners are not married and you can have more than two owners under this designation all owning equal shares.  Upon the passing of an owner, the surviving “joint tenants” (or owners) automatically own the property in equal shares.

Tenants in Common (TIC)

This designation means that each owner has an equal ownership interest (the percentages do not have to be equal).  If one owner passes, their interest is transferred to their estate and will pass according to their Last Will and Testament or under New York state intestacy laws if there is no Will.  Their beneficiaries then own that percentage of the property.  The transfer of the property through someone’s estate will require additional legal fees and court fees. Not to mention the delays by the court to process the transfer.  If a deed is silent as to the type of ownership, ie, it does not state JTWROS or TIC, then it is considered a TIC ownership.

A “Life Estate”

The life estate designation means that person retaining that interest has an ownership interest which changes as they age.  Having a life estate means that the person can live in that property for the rest of their life or even rent the property if so desired. That life estate owner has to give his or her permission to sell the home because they have a right to live in the home for their lifetime.

The life estate interest also means that they are responsible of the maintenance and upkeep of the property.  Upon the life estate holder’s passing, the property then passes, in its entirety, to the Grantees (typically the owner’s children) listed on the deed.  It is also possible to have a life estate on more than one property.

Please note that these designations don’t all provide protection of the property if an owner is looking to have Medicaid cover their long-term care costs.

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