There are many ways to hold your real estate title and if not planned properly, many problems can arise. Since real estate is likely one of your largest assets, it is important to be prepared for how it should be handled in the event that you pass away or become incapacitated.
One way to hold title is to put it under your individual name. However, if the scenarios mentioned above do arise, or you are otherwise unable to attend to business then the courts will have to get involved and appoint someone to act on your behalf. The court, moreover, will remain involved until you recover or pass away. This means that until one of those options occurs, the court is in charge of your assets. The provisions in a Will do not become effective until death; a durable power of attorney or a trust can avoid many problems. Many forms of real estate ownership operate by law and do not get affected by any language in a Will. For example, property owned jointly with rights of survivorship passes automatically to the survivor without any reference to a WillThere are many options that allow more than one name to be on the title. Just because these options exist though, does not mean they are useful.
There are many nuances and legal pitfalls in choosing the wrong form of ownership. The wrong title on real estate could result in an unintentional disinheritance of your own children; court battles for partition and very often tax consequences.
Real Estate can be held in any number of forms:
Tenants in common
Tenants by the entirety
Jointly
In Partnership or LLC names.
In a Corporation
In some form of trust
The trick is to know which one fits your situation.
No matter what your situation is, give title designation some thought and do your research. If you already have titles in place, check them and make necessary changes as soon as possible; you never know when it will be too late.
