As you create your estate plan, you may decide you do not want to utilize a living trust at this time. If you are married and own real estate, it is important to consider carefully how to title this significant asset if a trust is not used. There are several options available.
3 Options for Holding Title to Real Estate Without a Living Trust
The following are three options for married couples holding title to real estate without using a trust:
- Hold title to your real estate as joint tenants. This is a form of ownership that allows for a “right of survivorship.” That means, when the first spouse dies, the real estate will pass automatically to the surviving spouse without the need for court oversight or probate administration. This is the case even regardless of the terms of your spouse’s other estate planning documents, such as his or her will. Before choosing this option, however, it is very important to discuss with your attorney the possible tax consequences.
- Hold title to your real estate as community property. When an asset is deemed community property, each spouse owns one-half of that asset. If the property was acquired during the marriage, it is usually presumed that the property is community property. Each spouse can choose what should happen to his or her one-half interest in the property upon his or her death. This is done under the terms of the will. When the first spouse dies, the real estate will be subject to probate administration because the asset will not pass automatically to the surviving spouse. This is a drawback to holding the property in this form; however, there are sometimes tax advantages to doing so. It is important to discuss this option thoroughly with your estate planning attorney.
- Hold title to your real estate as community property with right of survivorship. This option for holding title to your real estate combines the benefit of avoiding probate administration with the tax advantages of community property. The surviving spouse will automatically receive the first spouse’s interest in the property upon his or her death. If you do not include a living trust as part of your estate plan, this is often a good option for property ownership for married couples.
Before deciding which option is best for your goals, it is important to consult with an experienced attorney. Contact us today at (714) 459-5481 for more information.