There are three basic ways that you can have an ownership interest in property: individually, jointly with another person, or through contract rights.
Jointly owned property is property in which both you and another person share an ownership interest. If property is jointly owned, then when one of the owners passes away, the property goes to the other owner, without the need for probate.
Examples of joint property include joint bank accounts and real estate held as joint tenants with rights of survivorship. With this type of property, the surviving owner merely needs to present a death certificate to initiate the transfer of the account or the real estate.
The exception to this rule is property that’s held by one or more person as Tenants in Common. Under this arrangement, each owner has a designated percentage of ownership in the property instead of equal shares. For example, one can have a 60% interest, while the other has a 40% interest; or one can have a 50% interest and the other also has a 50% interest. At death, a tenant in common’s percentage of the property does not go to the other owners but is treated as his or her individual property. If there is no revocable living trust in place to distribute this asset, then this portion of the property will have to be probated, and the owner’s heirs will inherit the owner’s portion of the property.
In order to make an effective estate plan, it’s important that you know whether the property you own is held jointly or individually or as tenants in common. An estate planning attorney can help you understand your ownership interest and how to best plan to pass it on to your loved ones.