Because Life Changes

June 3, 2008 | By Kelley Koehler | Filed Under First Time Buyer, Home Buying

There’s a part of our residential resale purchase contract that says:

Taking title may have significant legal, estate planning, and tax consequences. Buyer should obtain legal and tax advice.

I was in a class the other day and we were reviewing ways owners can hold title to property. The instructor went through some scenarios that were intended to drive home the point that people really need to think carefully about how they hold title.

For example.

Let’s say two people get married. Let’s say the husband has kids from a previous marriage. So the man and woman get married, buy property and hold title as Community Property with Right of Survivorship, and they each make out a will that says whichever of them dies last will leave the property to his kids from the previous marriage.

But then the husband dies, the property is transferred immediately to the wife because of the right of survivorship, and sometime after, Wife marries a man with whom she has kids. And rewrites her will to pass the property to her kids, and not the first husband’s kids. Who are now left with nothing.

Or how about this:

A husband and wife buy a property and hold title as Joint Tenants, which comes with a right of survivorship. Things go badly in their marriage, and husband has a mistress on the side. Husband gets sick, and before he dies, he deeds his share of the property to his mistress.

So now wife and mistress have equal ownership – and equal right to posses – the same house. I’m sure that’s going to work out well when mistress knocks on the door and demands to move in, according to her rights as an owner.

And I know thinking about how to hold title to a property isn’t the most fun thing on earth. It’s mostly about what happens when you die, or when your life changes drastically. But it is a decision that deserves some thought. Since I’m not a lawyer or an estate planner, I can’t really give you advice about how to hold title.

But – If you’d like to talk to an expert about your estate and the best way for you to hold title for your specific situation, I’d be happy to refer you to one!

Also, Title Security has a document about some common ways to take title.

tags: real estate, title, tucson

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