Real Estate

Estate Planning Basics: Joint Tenancy with the Right of Survivorship

Published on: September 22, 2024 | By Thomas W. McCulloch

One effective tool for property owners that are thinking through their estate plans is joint tenancy with the right of survivorship. While this form of ownership might not be right for everyone, it can certainly be an efficient, effective way to both maintain property and avoid probate down the line. Today, our blog offers some basics around joint tenancy with the right of survivorship, with the goal of helping you become well-versed in the strategy as you begin to think through whether it might be a tool you implement for your own assets.

What is Joint Tenancy with the Right of Survivorship?

Joint tenancy with the right of survivorship means that multiple individuals own a piece of property at the same time (“joint tenancy”). It gives each person an equal share of the property they own. Importantly, if one owner dies, the other owner becomes the sole owner (“right of survivorship”). If there are more than two owners and one owner dies, the remaining owners then take an equal share of the property upon the first owner’s death.

What are Some of the Benefits of Joint Tenancy with the Right of Survivorship?

One major advantage of this structure of ownership is that when one owner dies, the property does not have to pass through probate. Instead, ownership is automatically transferred. This can save significant time and money. It also allows the living owner(s) to own the property without any delay; that is, they do not have to wait for the completion of any legal processes before taking ownership of the property, since the property is already in their possession.

Transferring Real Estate in Texas Outside of Probate

Published on: November 15, 2023 | By McCulloch & Miller, PLLC

Passing real estate to beneficiaries can be more complicated than you might think. If you own property, there are several steps you must take in order to ensure your property passes down to your chosen beneficiaries. In general, real estate will go through the probate process, but there are a couple of ways to avoid probate if you are looking into transferring real estate as a part of your personal estate plan.

Option One: Transfer on Death Deeds

The first option for those who wish to avoid probate when transferring real estate is called the transfer on death deed. This deed allows a property owner to transfer his or her interest immediately upon death to whoever he or she names in the deed. The deed has to meet certain procedural requirements, like being in writing and being signed in the presence of a notary. Without these requirements met, the court might end up having the property pass through probate despite the property owner’s earnest attempt at avoiding it.

Option Two: Life Estate Deed

A life estate deed looks slightly different than a transfer on death deed. It gives legal title to the chosen beneficiary during the property owner’s lifetime. While the legal title no longer belongs to the original owner under this kind of deed, the owner does maintain the right to live on the property during his or her lifetime. This option can be a nice middle ground for estate planners, in that it makes the inheriting process easier for beneficiaries while still allowing them the benefit of residing on the land during their lifetime.

The Ever-Changing Field of Houston Estate Planning

Published on: August 3, 2021 | By McCulloch & Miller, PLLC

Estate planning has evolved greatly over the past century, and it continues to change with each passing year. For example, estate planning attorneys must regularly adapt client plans to changes in tax laws. Keeping up with changes to the legal field and their implications for estate planning is a task best left to the professionals.

A Texas case decided in June 2021 aptly illustrates the evolving field of estate planning. In the case, a company and individual both claimed a right to the deed to a 21.5-acre plot of land. In the end, the company prevailed because the court applied a law that is now no longer in effect.

At issue in the case was whether an attempted transfer of the land in 1995 was valid. The 1995 transfer did not involve either the individual or company involved in this case, but its ripple effects dramatically altered their rights down the line.

Texas Estate Planning After Purchasing a Home

Published on: June 24, 2021 | By McCulloch & Miller, PLLC

According to the National Association of Realtors, the pandemic has brought on an unprecedented amount of home sales in Texas and throughout the United States. As home sales increased, mortgage rates hit record lows, encouraging quarantined home buyers to jump-start their searches. Those who have bought or sold a home during this time should contact a Houston estate planning attorney to discuss their financial future.

Estate planning is a critical process that allows individuals to protect their assets, businesses, and loved ones. Although many people erroneously believe that estate plans are reserved for older wealthy individuals, that can not be farther from reality. The modernization of estate planning makes it an accessible and necessary way for people to safeguard their interests.

Developing a binding and effective estate plan will ensure that a person’s home goes where they want it to go after they pass on. One way to meet these goals is by placing a home in a trust. Estate planning laws do not require homeowners to own their home outright to transfer it to a revocable trust. Transferring a home into a trust allows family members to avoid going through a complex and lengthy probate process. There are many options on how best to do this, depending on the homeowner’s specific situation.

Why Joint Tenancy Is Not a Substitution for Creating a Houston Estate Plan

Published on: March 8, 2021 | By McCulloch & Miller, PLLC

Because estate planning is often perceived as a complicated process, Texans assume there are other options that are an acceptable substitute for an estate plan. One such example of this is joint tenancy. Joint tenancy is a legal arrangement in which two or more people own a property together with equal rights. However, joint tenancy on its own has major drawbacks that are often unexpected. Below are answers to common questions about the necessity of a Houston estate plan, and why a joint tenancy is not sufficient.

How Does Joint Tenancy Work?

Joint tenancy is property ownership between two or more parties. The parties come together to make a legally binding agreement through a deed, and the deed then will name the two owners as the joint tenants. While joint tenancy is most often utilized by couples—both married and unmarried—it can also be used by relatives, friends, or even just business associates. Because both parties have a claim to the property, they also share the benefits and downsides—be it mortgage payments, property taxes, or profits after sale. Besides a deed, joint tenancy can also apply to personal and business banking accounts, business assets like real estate, investment properties, and vehicles.

Can a Trust Become the Owner of My Home?

Published on: November 20, 2019 | By McCulloch & Miller, PLLC

Many instances of estate planning disasters start when well-meaning people try to use a simple solution for what is ultimately a complicated problem. It’s better for all concerned to meet with an estate planning attorney who can present strategies that will achieve goals, rather than attempt a do-it-yourself plan that creates more problems than it solves.

In one example of a do-it-yourself estate plan, a husband decides to use his inheritance to purchase the family home. His wife signs a quitclaim deed to him that puts the property into his living trust, on the condition that if he dies before she does, she is allowed to live in the home until death.

However, the living trust was never signed. So, what would happen to the property if the husband were to die before the wife?

Is There a Way to Avoid Paying Taxes on a Jointly-Owned Home?

Published on: October 21, 2019 | By McCulloch & Miller, PLLC

There are many inheritance scenarios, where people hope that a simple solution will save them time and money. Unfortunately, that’s not always the way estate or tax laws work.

A woman received joint ownership of her father’s house about a decade ago. Her father is still living there, and so is her sister. The woman doesn’t pay for any of the expenses; she and her father take care of their own costs. The sisters plan on selling the home, after their father passes. The woman wonders if she can simply give her sister her half of the home and avoid paying any taxes.

This situation is expanded upon in recent nj.com article, “My sister and I own my father’s home. How can I avoid taxes?” The article notes that a sibling may give her half of a home owned in joint ownership to a sibling, but there may still be some tax consequences.

Millennials Cautious About the Stock Market

Published on: October 15, 2019 | By McCulloch & Miller, PLLC

Sounding more like their great grandparents than their parents, millennials say they’d rather buy real estate than invest in markets. However, they might be heading in a dangerous direction.

When Bankrate asked more than 1,000 Americans where they would prefer to invest money—long-term funds that they don’t need for another decade—the response was surprising. Slightly more than thirty percent said they would invest in real estate.

For young people, this preference is especially true. Among millennials (those ages 23 to 38), 36% responded that real estate is the best long-term investment option. Zero-risk cash investments, such as high-yield savings accounts or CDs, was second with 18% of respondents, and the stock market was third, with 16% of respondents.

Should a Reverse Mortgage Be Part of My Retirement Plan?

Published on: June 5, 2019 | By McCulloch & Miller, PLLC

If you’ve got a fair amount of equity in your home and no other way to cover a healthcare cost or if the bills are coming in faster than your retirement accounts can manage, it might be time to consider a reverse mortgage.

For retirees in a financial tight spot, a home equity line of credit or borrowing against an existing home equity line of credit can provide a short-term solution. If you are at least 62 with a home that is not heavily mortgaged, a reverse mortgage is another option.

A revere mortgage gives you tax-free cash. No repayments are due, until you die or move out of the house.

What’s the Best Way to Title a House with Two Owners?

Published on: May 15, 2019 | By McCulloch & Miller, PLLC

How home ownership is titled, or how it is described on the title to the house, can have far reaching implications that may not come into play for decades.

Deciding how the owners of a home will hold title to it, is a much bigger decision than most people think, says The Washington Post in a recent article, “What you need to know about holding title to a home with a loved one.” Before you sit down at the closing table to finalize the purchase of a home, or if the house is being re-titled to align with an estate plan, it’s important to understand the different ways that a home can be owned with another person.

There are three primary ways to title property between spouses. Joint tenancy is the least common and typically must include the language “with right of survivorship and not as tenants in common.” Spouses typically acquire title as “tenants by the entireties,” which only applies to spouses in a limited number of states.