When two or more people pool funds, it is easier to acquire property and manage it. You may decide to own property as joint tenants, where each owner has an equal interest, or as tenants in common, where each person owns a separate share, which can be equal or unequal.
However, joint ownership can also affect estate administration and who inherits your portion of the property. You should, therefore, consider how your property is titled and how the arrangement fits into your estate plan before purchasing property with someone else. Here is what might happen to your share when you die.
Your Share May Pass to the Surviving Owner
If you own property as joint tenants with a right of survivorship, your share may automatically pass to the surviving owner when you die. This means the property does not become part of your probate estate for distribution under your will.
For example, if you jointly own a property, the surviving owner may become the sole owner. Your beneficiaries may not inherit your interest in that property, even if your will says that your assets should go to them.
Your Share May Become Part of Your Estate
If you own property as tenants in common, your share becomes part of your estate when you die. Unlike joint tenancy, your interest doesn’t automatically pass to the other co-owner.
Instead, your share may pass according to your will or, if you die without a valid will, under the state’s intestacy laws. This means your beneficiary could inherit your share and become a co-owner with the surviving owner.
The Mortgage Does Not Automatically Disappear
A co-owner’s death does not generally cancel a mortgage secured by the property. The surviving owner or the deceased owner’s estate may still have responsibilities under the loan agreement, depending on how the property and mortgage are structured.
If payments are missed, the lender may have the right to take action against the property, even while the estate is being settled. Other costs, such as property taxes and insurance, may also need to be paid.
For this reason, co-owners should understand how the mortgage would be handled if one owner dies. This is particularly important when the surviving owner cannot afford the mortgage payments alone.
Review Your Ownership Before It Becomes a Problem
The fate of a jointly owned property after you die depends largely on how it is titled and the estate planning documents governing your assets. You should, therefore, review your deed alongside your will, trust, and other estate planning documents to avoid unnecessary conflicts.
You may also revisit your arrangements after major life changes, such as marriage, divorce, the birth of a child, or purchasing another property to ensure your properties are transferred as intended.
At Michael F. Kanzer & Associates, P.C., we can help you review your property ownership and create a comprehensive estate plan. If you have questions about jointly owned property, wills, trusts, or other estate planning matters, contact our team today to discuss your situation and learn about your options.