How Should You Title Your Home?

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You might not realize there are several options for how you title your home, and the best one depends on several factors, such as your family’s circumstances, your reasons for buying a home, and what you want to happen to it after you pass away.

Here’s a general primer on each of the most common title options and the situations in which they’d be applicable:

Sole ownership
A property with a sole ownership title is in the name of one person.

Who it’s best for: Single people living alone or the spouse who is purchasing a property as an investment.

What to know: If a married person wants to assume full financial responsibility for a property, their spouse must typically sign a quitclaim deed, giving up their ownership rights.

Joint tenancy with the right of survivorship
Two or more individuals purchasing a property together, in which each person owns an equal portion of the property and they move in at the same time.

Who it’s best for: Couples purchasing a property together.

What to know: Under joint tenancy, if one person dies, the other gets full ownership of the property without it passing through probate. There are also some cases in which you might not want joint tenancy, such as if one spouse has credit issues or works in a high-liability occupation. In those cases, creditors or litigants could potentially lay claim to the property if it’s held in joint tenancy.

Tenancy in common
Under this method, multiple people can hold the title and own the property together, but they’re able to sell their interest or pass it on to beneficiaries of their choosing after they pass away.

Who it’s best for: Tenancy in common is best for groups of people who want to purchase a property, and for married couples who don’t want their share of the property to automatically transfer to their spouse.

What to know: If you own a property via tenancy in common and don’t have a will, your share of the property will be distributed based on state probate law.

Tenants by entirety
Some states allow married couples to own a property via this title method, which gives both spouses full ownership of the property. Creditors can’t lay claim to the property if they’re pursuing a debt that’s only owed by one of the spouses.

Who it’s best for: Married couples in states that allow tenants by entirety.

What to know: Under this method of holding title, one spouse cannot sell their share of the property without consent from the other spouse.

In a living trust
A trust is a legal vehicle that allows you (the trustee) to pass assets such as property to your beneficiary after your death without going through probate.

Who it’s best for: Anyone who wants total control over what happens to their interest in a property after their death.

What to know: You’ll need to hire a lawyer in order to draw up the trust, but you could save your heirs any estate taxes and court fees associated with probate. Plus, the terms of a trust are typically kept private and out of the public record.

How to change your title
If your life circumstances change, the process to change your title is relatively simple and inexpensive. The paperwork can be tricky, however, so get a title professional and a real estate lawyer’s help to make sure that you’re not making any mistakes.

Adapted from a blog by Beth Braverman on Bankrate.com.

This material is not intended to be relied upon as a statement of the law, and is not to be construed as legal, tax or investment advice. You are encouraged to consult your legal, tax or investment professional for specific advice. The material is meant for general illustration and/or informational purposes only. Although the information has been gathered from sources believed to be reliable, no representation is made as to its accuracy.

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