Although commendable, a few mistakes in your property acquisition might mar everything you have worked hard to achieve. One of the common mistakes which will affect the assets you have accumulated in the form of property ownership you choose.
This will determine how your assets will be distributed after your death and might become the cause of strife in your family if not correctly handled. Most people will get property solicitors in Townsville involved only when there is an ongoing court battle for property ownership or are drawing their will.
You should, however, get a property solicitor to guide you through all your investments to guarantee you make the right choices on the form of ownership which will meet your future desires. The following are tidbits on how different property ownership structures will affect its distribution after your demise.
Sole Ownership
Here, a single person will own an undivided property interest. The interest can be transferred to another person through a will or trust or the intestate succession laws of your state if you do not have a named heir.
The primary benefit of sole ownership is that your heirs will receive the property you leave to them at current market value. They will hence need not to worry about the payment of capital gains if they choose to sell it.
Joint Tenancy
Here, you will own equal property shares with two or more people. The value of a deceased’s property’s share is automatically passed on to the surviving owner with no tax or probate consequences if the joint tenancy exists between a married couple.
If the property owners are however not married, the entire property will be included in a deceased’s estate and taken through probate. This is hence not your best choice if you want to own property with someone other than your spouse.
Joint Tenancy with a Right of Survivorship (JTWROS)
Here, joint tenants will own collective rights to a property’s use. If one of the tenants passes on, the remaining tenants will inherit their shares without undergoing the probate process. A surviving tenant in JTWROS can gift their shares in a property to someone else.
If surviving tenants, however, decide to sell the property, they will only get a step-up for the value of the deceased’s share. This means they will pay capital gains on the value of their property share.
Tenancy in Common
Here, tenants will own shares of a property in different percentages. A deceased’s interest in ownership will not pass on to surviving tenants automatically but rather will form part of the deceased’s estate. This means the surviving owners cannot sell the property until the probate process for the deceased’s estate is complete, and the shares are passed to the heirs.
Most people assume property investment is as simple as signing a few documents. The above forms of asset ownership can muddle your investment if not correctly chosen. The wrong choice from the above will affect the extent of your property enjoyment and what your loved ones will inherit after your death.