Shared Interests in Land
Coming to the end of our discussion on the gifting
of real property, I wanted to share some information on various topics. First is shared or joint interests in
land. One of the most common
developments over property under Estate Planning is the giving joint interests
in land. Easiest scenario is where
you have a home and you give it to your children upon your death. How do you do that and how will they
own it?
Basically put, a joint interest in land is where two
or more persons own shares, equal or unequal, under a title created by a single
will or transfer that is expressly declared to be a joint tenancy. We see this in several formats. We will discuss Joint Tenancy, Tenancy
in Common, Partnership Interests and Community Property.
The most common form of this type of transfer is the
“Joint Tenancy”. With a Joint
Tenancy, the law creates equal rights in all persons receiving the property
with a “right of survivorship”.
That is to say, that of the several equal owners of the inherited
property, as they die, their interest immediately passes equally to the
remaining joint tenants.
Obviously, with a simple example of two children, when the first child
dies, the second child inherits the entire gift of land. Fun with math, if there are 3 children,
each has a 1/3 undivided interest, and when the first child dies, the 2
survivors get and divide that first child’s 1/3 interest, and then they each
have a 1/2 undivided interest.
Another form of joint ownership is a common tenancy,
more commonly called Tenancy in Common.
A Tenancy in Common is another shared ownership where each party takes
an interest in the property, but with no rights of survivorship. Thus when each tenant in common passes,
their fractional interest does not automatically go to the other common
tenants, but rather as they may declare in their will or by law. This is a more common format for having
unequal shares over time. Thus,
more fun with math, if there are 3 children, each has a 1/3 undivided interest
in common, and when the first child dies, the 2 survivors still have their 1/3
interest each, but the first to die may pass their 1/3 to their two children,
so each grandchild has 1/2 of 1/3,
or 1/6 each, and the surviving children still have each child’s original 1/3
interest.
Another form of joint ownership could be a
Partnership, holding land for a partnership purpose. While people think of partnerships commonly as a business,
there is no limit to relatives being partners, or even married persons.
Finally, I also mentioned Community Property. This is a common, if not default
position of joint ownership between a husband and wife, also with rights of
survivorship. I would also venture
to guess, while I have not yet seen specific law addressing the point, since
California has had recent changes relative to same-sex marriage, the husband
and wife language for community property will likely be broadened to allow
community property ownership between spouses, gender neutral and more
generically.
A final concept to be clear on. The current law in California states a
clear presumption, that if the gift in your Will is not clear as to any express
form of shared ownership, the courts would presume that the joint gift will
create a Tenancy in Common, with any benefits or burderns created by that form
of title. Most notably, the
presumptions of survivorship. This
may be a critical concern in your drafting of the Will.
I don’t want to overload you, so we’ll end here, but
next time we will discuss what happens with these various joint
ownerships. After we finish
talking about Real Estate, we will wrap up Wills by talking about giving the
family business and lastly, we will go over residuary gifts. We will also
have a specific discussion about gifts to minors. We will wrap up wills
with some other discussions including charitable gifts. After that, I
hope to have special discussions on taxes. In the meantime, I hope you
will review your Estate Plan with you're “A” Team, or at least begin to seek
out an Estate Planning Attorney to start this process. Stay tuned for
future blogs. However, if you have any questions, feel free to respond
below, or if you are interested in learning more about an Estate Plan, Wills,
Trusts, Advanced Healthcare Directives, or Divorce, Custody, Visitation, Child
Support, Spousal Support, Property Division, Modifications, Remarriage, or
Pre-Nuptial Agreements, please contact me at please contact me at fbegun@gmail.com,
or through my other websites, www.fcbegun.com, or www.linkedin.com
for Fred Begun.
