Types of Property Ownership and How They Affect You

When you’re getting your estate in order, you’ll probably consider any wills and trusts as a means of property distribution. However, it’s important to remember that the way you hold onto these titles affects how these pass onto future generations. That being the case, there are several types of property ownership that can apply to and affect your assets.

Sole Ownership

• As the name implies, someone with sole ownership owns a property in its entirety.
• The property is included in the decedent's estate and is usually passed by standard transfer documents or laws of intestate succession.
• When the beneficiary receives the basis, it is brought up to fair market value, so the capital gain is eliminated if the property is immediately sold.

Joint Tenancy

• This exists when two or more people share equal, undivided interests in a property. While joint tenancy can be shared by anyone, there are certain tax benefits that can only be shared between husband and wife.
• Joint properties cannot be transferred using traditional documents, but are instead passed down by “operation of law” to the surviving joint owners.
• Under qualified joint tenancy, half of the property is included in the first decedent’s estate, unless a non-spouse participate has joint ownership. In this case, the entire property value would be included in the decedent’s estate as long as there is proof that he or she contributed to property cost.

Community Property

• Under community property statutes, any property acquired or earned by a spouse during the time that they are married is equally owned by each spouse. The idea here is that properties earned by one spouse do not belong solely to the producer but rather to the community of husband and wife.
• When it comes to estate conservation, there are no rules that dictate how one party must give away his or her portion of the estate. For example, there is no rule requiring a person to leave his or her entire estate to the surviving spouse — even though this usually happens anyway.

When planning your estate, it’s important to be aware of which type of ownership applies to your properties and assets. At American Investment Planners LLC, we want to help you and your money stay safe, which is why we make it a priority to help you prepare for the best financial future possible. From managing your cash to 529 savings plans, we’re here to help with anything you may need. To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.