Vesting ~ How to Hold Title To Real Property

Vesting ~ How to Hold Title To Real Property

Congratulations! Your offer has been accepted and now you have received the escrow documents on the home you are about to close on. One of the forms that will need to be completed asks how you want to take title to your new home or how title will be vested. When the seller deeds the property over to you, this is how your names will appear in the public records.

In making this determination, there are many items you will want to consider; especially if there are multiple parties buying property together. Take the time to understand how each will affect you in the areas of your ability to transfer title, disposition of property in the event of a divorce or death or exposure to creditor claims. In addition, the manner in which you hold title may also affect property taxes, income taxes, inheritance and gift taxes as well as probate issues upon death.

If you are purchasing real estate as an individual, there are a few different forms of ownership.

• Single Woman/Man~ property held by a single person who is not legally married
• Married Sole and Separate~Property acquired by a husband or wife wanting to hold titlesolely. Often times the sposue of the title holder will be required to relinquish rights to the property by executing a Quitclaim deed. Check with your attorney for community property issues if you determine this is how you would like to hold title.
• Domestic Partner and His/Her Sole and Separate Property~Same as above for a domestic partner to hold property solely. Domestic Partner may also be required to relinquish property rights.

When purchasing a home with multiple owners; your spouse, business partners or family members there are also ways to hold title that may determine percentage of ownership and how property will be disbursed upon death of one of the title holders.

• Joint Tenants~Property acquired by two or more people who may or may not be married. Each will have equal interest in the property. Upon death the other has the right of survivorship and the property will automatically convey to the surviving joint tenant. Title held in this manner does not allow for property disposition by will.
• Tenants In Common~This form of ownership by two or more people gives the ability to determine fractional ownership. One person may have one quarter ownership, the other three quarters ownership. The fractional interests in the property do not have to be equal and each tenant in common owns a share of the property and is responsible for their share of expenses as well as are entitled to their share of any income earned. Any interest held as tenants in common may be willed to heirs or sold.

  

• Community Property~Property held by husband and wife during their marriage in which they plan to own together. Either party may will his/her portion of the community property. In California, real estate conveyed to a married woman or man is considered to be community property unless otherwise indicated.
• Community Property with Right of Survivorship~Property held by a husband and wife during their marriage in which they plan to own together. The difference in holding title in this manner is that upon death, the decedents interest ends and the surviving spouse owns the property by right of survivorship.

Title may also be held in the name of a trust, corporation, partnership or LLC. Check with your lender prior to making a determination on one of these ways to ensure they will allow you to hold title in any of these manners.

How you determine you are going to hold title may be based on many factors. You will want to examine all tax consequences, survivor benefits and family circumstances prior to determining making this decision. Each state may have different laws so do your research to be sure how the laws are applicable to your situation.

You should not allow anyone other than your attorney of financial planner advise you on how to hold title to real property. If you are unsure, please discuss the implications with an attorney. you would not want to make a decision that may affect you negatively tax wise or your heirs upon death.