If you are a real property owner, you should be well aware of the type of ownership you have in your property and the legal relationship you have with co-owners. You should also consult your estate planning attorney regarding the best ways to protect your heirs’ rights to the full value of your property.
Many people own real property without truly understanding how they hold title to it – or the consequences of the type of title that they hold. This lack of understanding can lead to very unintended and bad results for heirs and beneficiaries of real property owners.
As a lesson, take a recent case out of Greenwich, Connecticut, featured in an article in The Greenwhich Citizen.
In the case in Greenwich, an unmarried couple purchased a home as tenants-in-common. The couple of course split up some time later, and the boyfriend moved out. At the woman’s death, her interest in the house naturally passed to her heirs, but those heirs were surprised to find out that their interest was not a 100% ownership interest in the house.
In most states, a real property owner’s tenancy-in-common interest passes to his or her heirs or beneficiaries at death. This means that those heirs or beneficiaries automatically enter into a legal relationship with the surviving tenant-in-common. The options at this point usually include selling the property and splitting the net proceeds by interest, partitioning the property, or entering into an agreement to have one of the tenants-in-common buy out the interest of the other(s).
The ex-boyfriend persisted in arguing for a lower and lower valuation of the house with the probate court, complicating efforts to sell it … and also making it easier for him to buy out the woman’s heirs. In other words: the ownership fell into many bickering hands, each with an agenda, and none of whom had much desire to uphold the woman’s intentions.
Let this not-so-uncommon probate mess be a warning for the real property owner. You should be aware of the type of ownership you have in your real property and understand the legal relationships you have with co-owners. You should also consult your estate planning attorney regarding the best ways to avoid real property ownership problems like this one.
Reference: The Greenwich Citizen (July 20, 2011) “Another Estate Planning Nightmare: Tenant-in-Common”