The first step in understanding property ownership and how assets can be titled is to know the most common types of proprietorship:
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:
Before deciding which one is right for you, it's best to know what they are:
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:
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:
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.