What to Know about Survivorship before You Purchase a Home
Transcript:
(Editor's note: Brian is Clear Counsel's Communications Director. His prompts represent a conglomeration of inquiries submitted. If you have you have a question you would like answered in an upcoming video, email the inquiry to brian@clearcounsel.com)
Jordan: Hi, I'm Jordan Flake with Clear Counsel Law Group. One of the questions that we get a lot is what is survivorship. You hear this word survivorship. For example, in the context of owning a home you'll hear the words joint tenancy with the right of survivorship. Basically, survivorship refers to the fact that after one of the owners passes away, the asset goes directly to the other owner without the need for probate. If you own a house in joint tenancy with rights of survivorship, say you own that house with your spouse, and your spouse passes away, that house becomes yours exclusively by operation of law. The principle of law that causes that transfer to occur automatically, we refer to that as survivorship.
It's important to know about survivorship because those assets that are held jointly, with survivorship essentially, do not need to go through any type of probate process because after an individual passes away, there's really no doubt as to who owns that property. Did you have any question, Brian, or follow up on ...
Brian: Sure, could you explain how a house becomes owned in joint tenancy?
Jordan: When you purchase a home, the real estate agents will likely ask you how you want to take title to the property. What that really means is how is it that you as a purchaser want to hold that property under the eyes of the law. There are several different options. There's something called tenants in common, which means that you own 50% and the other owner owns the other 50%. Even though you own the same property, it's as if you own two separate assets because the property is split into two shares, 50% shares. That's tenants in common.
What happens in that situation, incidentally, is that if one of the tenants passes away, that 50% share just stays there until there's a court order determining what happens to it. In a way, to understand survivorship it's helpful to understand tenancy in common because basically they're just totally different in the sense that with joint tenancy with rights of survivorship, it's automatically transferred to the other person whose name is on the title.
When you purchase a property is when the titling of the property will happen. Now if you purchased a property and you're not sure exactly how you hold title to it, our law firm will do a free consultation where we will review any estate planning documents you have. We will review all of your assets, how those assets are held. We go through and say, if heaven forbid you were to pass away, this is what would happen with this asset. That's what we're getting at when we're talking about taking title, and survivorship, and tenancy, and things of that nature. Other questions on that?
Brian: Is there a type of ownership that is the default or can you opt into all of them?
Jordan: You can opt into all of them. That's the point of the realtor or the title company asking you how ... if they sit down with you and your spouse for example, how do you want to own this property. If you do not make a selection on that front and there are two owners to the property, it is presumed under the law to be a tenancy in common, meaning that one spouse owns 50%, the other spouse owns a divided 50%. Now this is where you could potentially face a probate issue because if one of the spouses passed away, that 50% is just sitting there hanging out in that deceased spouse's name. All of a sudden, the surviving spouse might run to Clark County and say, "Well that was my husband and he wanted me to have everything." Clark County says, "That may be true but in order to actually give you the entirety of the house, we need a court order." The process for obtaining that court order is a probate proceeding, which can be time consuming or expensive and fraught with some difficulty.
If you're in that situation where either you have a loved one pass away and you're not sure how the property was titled, or you own a house yourself and you don't remember going through this conversation about how to title the property, please come see us so that we can go over those assets and help you understand what you're facing.
