There are five forms of property ownership recognized in Los Angeles, California: sole ownership, three forms of co-ownership referred to as joint tenancy, tenancy in common, and tenancy by the entirety, and community property. Sole ownership, as the title indicates, means only one person owns all of the interest in the property. Each form of ownership has its own requirements, limitations, advantages and disadvantages. Understanding them up front will lessen the possibility of problems later on.
Sole ownership is the simplest form of ownership and allows for the greatest control over the property. A sole owner can sell the property, give it away, borrow against it, or leave the property in a will. Because it is the simplest form of ownership, it usually does not create any estate planning issues. If you have a will, but do not name specific beneficiaries for property of which you have sole ownership, the property will be distributed based on the directives in your will. If you do not have a will, the property will be distributed according to the laws of intestate succession. Co-ownership means more than one person has a legal interest in the property.
Only ten states treat the property of married couples as Community Property and California is one of them. So, in California, any property you owned before you were married belongs to you alone. However, any property you obtained during your marriage is considered community property and your spouse owns an equal interest. The only exception are gifts or inheritances received by you alone during the marriage.
What does “joint tenancy” mean?
When you own property with another person and hold an undivided interest in that property, a joint tenancy is created. Your spouse does not always have to be your joint tenant. For example, you can have a certificate of deposit (CD) in your name and the name of your child. As a joint tenant, you have the ability to sell or gift your interest in the property at any time, as long as there is no restrictions set by contract or title.
Some joint tenancies contain a “right of survivorship.” This means the property is automatically transferred to the surviving joint tenant when the other joint tenant dies. Property owned in joint tenancy cannot be transferred by will.
Advantages to joint tenancy with right of survivorship in Los Angeles CA.
Joint tenancies in Los Angeles California come with many advantages. Jointly owned property does not go through probate, instead, the property becomes available immediately when one joint tenant dies. This feature can reduce the cost of probate quite a bit. One of the major benefits of a joint tenancy is that the property is protected from the deceased tenant’s creditors.
Disadvantages to joint tenancy with right of survivorship.
With advantages come disadvantages. One drawback to a joint tenancy owned by a married couple is the fact that they are somewhat complicated to modify when there is a divorce or remarriage. Another disadvantage is that one joint tenancy can liquidate the property without notifying the other joint tenants. Likewise, one joint tenant can sell the property even when the other joint tenants don’t agree with the sale.
Determining which type of property ownership is right for you is something that a California estate planning attorney can assist you with.