Guide on Property Ownership

The first step in understanding property ownership and how assets can be titled is to know the most common types of proprietorship:

• Sole Ownership: a property is 100% owned by one person in their name alone, without any payable-on-death or transfer-on-death designation.
• Joint Tenancy(with right of survivorship): 2 or more tenants own equal shares of a property, all benefiting from equal rights, use, or income.When one of them dies, ownership goes to the surviving tenant.
• Tenants by the Entirety (with right of survivorship): the proprietorship is equally split between wife and husband. If either spouse dies, the whole title is transferred to the remaining one.
• Tenancy in Common: 2 or more persons own different percentages of a real estate asset, therefore owners are not granted equal rights, use, or income.
• Owning Trust: A trustee is designated to manage real estate assets by a trustor, who also appoints one or more beneficiaries.
• Owning Corporation: As separate legal entities, corporations hold the title to a real estate asset.
• Owning Partnership (LLC): The title to a commercial real estate asset is held through a limited liability company, reducing the personal property ownership risk for the LLC members.

A joint tenancy agreement is the most frequent type of land ownership. It refers to 2 or more people co-owning a property. If one of them dies, their property share goes to the remaining owner without being included in the decedent's estate.

In common law, an estate is a person's net worth. It comprises all their possessions, interests, legal rights, and entitlements to property, less their liabilities at any point in time. Usually, the term "estate" is limited to the sum of an individual's assets. In real estate planning, the "estate" refers to a large, privately owned area of land in the country, often with a large house.

When a person dies without leaving a will, their money and property (the estate) must be shared according to the rules of intestacy. The deceased becomes an "intestate person" and only married/civil partners or close relatives can inherit their possessions. If there is a valid will, a person who handles the estate (known as the "executor" or "administrator") will pay the defunct's debts, taxes, and convey the inheritance to the entitled persons. More information about assets can be found in the asset search report.

An estate transfer is the distribution of someone's valuable possessions (real estate, investments, life insurance) to their heirs/beneficiaries after the owner passes away. There are 4 main methods of completing an estate transfer:

• Will (probate asset) – if assets are owned by the decedent alone;
• Non-probate assets – property held jointly, with a title document and survivorship rights;
• Gifting of assets (a deed of gift) – the ownership of a property is transferred as a gift;
• Family trust - assets are transferred to the trustees and held on trust in the advantage of the family members.

Before deciding which one is right for you, it's best to know what they are:

• A will (or testament) is a legally enforceable document that dictates how your affairs and assets should be distributed after you die. If you (the owner) didn't appoint any recipients, the state where you resided determines who inherits the assets under the rules of intestacy.
• A trust is an arrangement or a fiduciary rapport in which you give a second party (one or more people know as trustees) the power to manage your properties for the benefit of the receivers (the third party).

Unlike a trust that can remain private, a will becomes a public record. The main difference between the two is the time they go into action. Wills become effective after someone's death while living revocable trusts are activated immediately. Trusts allow more control over the assets, although this comes at a cost: they require active management, paperwork, they're difficult to set up and more expensive. Also, wills cannot be used to reduce estate taxes and avoid probate and trust can.

Probate is the legal procedure through which someone is authorized by the court to deal with the deceased person's estate, including the collection of their physical and financial assets, paying off debts, and distributing the assets to the heirs. In broader terms, we have 2 situations:

• Testate probate: the decedent left a will and the home will be inherited by the survivors;
• Intestate probate: there is no will left and the house will have to be sold through probate court.

If your net worth exceeds $100,000, you own many properties and you have specific instructions of who gets what after your death, a trust is what you need. Trusts protect an estate from creditors or lawsuits and minimize estate taxes.

Before adding trust to your estate plan, here are the three main classes of trusts:

• Testamentary Trusts or Trust Under Will - created through and will go into effect upon one's death;
• Revocable Trusts or Living Trusts – used to avoid a lengthy and expensive probate process, they allow the grantor to revoke or change the trust and when they die, this trust is irrevocable. Very efficient, quick, and less costly for people who own properties in multiple states.
• Irrevocable Trusts – assets are removed from someone's estate and placed in an irrevocable trust. From that moment on, they can no longer be amended or removed from it, protecting the initiator against potential estate taxes.

If a homeowner dies, the estate must go through probate - the court-supervised process for reimbursing a deceased's debts and splitting their possessions among heirs. The home could be sold to pay debts or it might pass to an heir or beneficiary.

In case of joint ownership, the deceased's share of the property is transferred to the living party automatically on their death. The living joint owner or surviving spouse must inform the Land Registry of the death by filling in a 'Deceased joint proprietor' form on the government's website. The form must be sent to the Land Registry, together with an official copy of the death certificate.

The purpose of a right of survivorship is to pass the share to other tenants on the death of one of the joint owners. The right of survivorship is inherent to some types of joint ownership, mostly joint tenancy and tenancy in common. For jointly-owned land with a right of survivorship, the surviving party automatically receives a dying owner's share, without having to go through a complicated probate process.

The process of estate administration takes place after the owner dies. It involves collecting their probate estate assets, paying the creditors, and sharing the remaining assets to the heirs appointed in the will.