Page 16 - Southern Exposure - August '21

Page 16, Southern Exposure

ELdEr EstatE pLaNNiNg

Why Title Matters

Submitted by Anné Desormier-Cartwright, J.D.
Real estate can take on may be against it. As mentioned before, a benefit of this type company (LLC). Instead of owning the real estate, you own
different forms of ownership of ownership is that ownership is transferred automatically a part of the LLC (known as a membership interest), and that
depending upon the number at death, avoiding probate. However, if you become the sole is what will need to be transferred upon your death according
of parties and the unique owner, then you will face the issues associated with owning to the terms of an operating agreement or estate planning
circumstances involved. real estate individually. documents, or based on state law if there is no will or trust.
Understanding how your real Tenancy By The Entireties In the LLC operating agreement, you can also include rules
estate is owned, or “titled,” In some states, real estate received or purchased by spouses instructing how the real estate is to be used and managed, as
is necessary because this can be owned as tenants by the entirety. Although some of well as outline the rules pertaining to the membership interests
determines the extent of the applicable state laws still refer to the parties as husband in the LLC. One of the major benefits of using an LLC is that it
control you have over your and wife, with the proper language in a deed, which clearly provides limited liability. If a lawsuit is filed based on a claim
real estate, how susceptible demonstrates the desire to own the real estate as tenants by arising from the real estate, or if a creditor seeks to satisfy a
your property is to creditors, the entirety, all individuals who are legally married at the time claim, the only assets available to satisfy any judgments or
and what will happen to it upon your death. Below are some they receive the real estate are able to own it as tenants by the creditors are those owned by the LLC. In many states, if you
of the common ways in which real estate is owned. entirety. This type of ownership can apply to any real estate, have personal creditor issues, the creditors are limited as to
Individually not just the primary residence. Because spouses are considered what they can reach inside the LLC to satisfy their claims. It is
One of the most common ways people own real estate is one unit, one spouse cannot transfer or mortgage the real estate important to note that the asset protection benefits of an LLC
individually. As the sole owner, you have full control over the without the other spouse’s consent. However, this also means can vary depending on state or federal law, or your unique
real estate. You can transfer it to anyone and can mortgage that a creditor of one spouse cannot go after real estate that is situation. If this is a concern for you, we encourage you to call
it. However, although the bankruptcy code offers some owned as tenants by the entirety (except for a federal tax lien) to us as soon as possible.
protections for personal residences, should you have creditor satisfy the creditor’s claims. At a spouse’s death, the surviving Give Us A Call Today!
issues, the real estate could be vulnerable to being taken to spouse will automatically become the sole owner. This keeps Regardless of how you think you own your real estate it
satisfy debts or creditors’ claims. Additionally, at your death, the real estate and its value out of the probate proceedings, is important that you review your documents and confirm
the real estate will be transferred to the individual(s) named but as the sole owner, the surviving spouse will face the issues your understanding with an experienced attorney. The title of
in your will (or trust) or according to state law, both of which associated with owning the real estate individually. your real estate can play a large role in how your estate plan
will require probate court involvement to transfer ownership In A Trust is set up, and if your real estate is not titled properly, it can
to your heirs. This can be a time-consuming, public, and Another option for real estate ownership is to transfer it completely undo your intent for your estate planning. Give us
expensive process for your loved ones (especially if the real to or have it purchased by a trust. As the trustmaker, you can a call today so we can review your deeds and create an estate
estate is very valuable). establish rules for the use of the real estate, appoint a person plan that will protect your property for future generations.
Tenants In Common (sometimes yourself) to oversee the maintenance of the real If you have questions about your estate plan and what
When several people own real estate as tenants in common, estate while allowing others (sometimes yourself) to enjoy it. documents you should have in place to plan your estate,
the entire property is owned by the group, meaning that no one However, it is important to note that the control and benefits schedule a free consultation today by calling our office at
person can claim ownership of a specific portion of it. Yet the can vary depending upon what type of trust is being used. If the (561) 694-7827, Anné Desormier-Cartwright, Esq., Elder &
ownership does not have to be equal. One person can own real estate is in a revocable trust, then you will have the utmost Estate Planning Attorneys PA, 480 Maplewood Drive, Suite
a 25 percent interest (i.e. “share”) while the other has a 75 freedom to manage and use the real estate if you appoint yourself 3, Jupiter, FL 33458.
percent ownership interest. Each co-owner is free to transfer as the trustee and name yourself as a beneficiary. But if it is in an The content of this article is general and should not be
or mortgage their interest as they wish. However, the more co- irrevocable trust for asset protection purposes, the selection of relied upon without review of your specific circumstances by
owners, the higher the possibility for creditor issues. Although the trustee and beneficiaries becomes more complicated. While competent legal counsel. Reliance on the information herein
creditors can only collect from the co-owner that owes them a primary residence can be transferred to a trust with or without is at your own risk, as it expresses no opinion by the firm
money, they may be able to force a sale of the real estate to a mortgage, other properties with a mortgage might first require on your specific circumstances or legal needs. An attorney
satisfy their claim. Upon a co-owner’s passing, their ownership bank approval before it can be transferred to a trust. One of the client relationship is not created through the information
interest will transfer to whomever the co-owner has specified in primary benefits of transferring ownership of your real estate to provided herein.
the owner’s will or by state law if no estate plan was prepared. a trust is that at your death, the real estate does not have to go To comply with the U.S. Treasury regulations, we must
Both options require the real estate to go through the probate through the probate process. This is because the trust, not you, inform you that (i) any U.S. federal tax advice contained in
process to transfer ownership to the co-owner’s heirs. is the owner, and the trust can never die. In most cases, the trust this newsletter was not intended or written to be used, and
Joint Tenancy document will provide instructions about what will happen to cannot be used, by any person for the purpose of avoiding
For this type of ownership, also known as “joint tenancy the real estate upon your death. U.S. federal tax penalties that may be imposed on such person
with right of survivorship,” two or more individuals own an By A Limited Liability Company and (ii) each taxpayer should seek advice from their tax
equal and undivided interest (share) in the real estate. When Another entity that can own real estate is a limited liability advisor based on the taxpayer’s particular circumstances.
one of the owners dies, their interest automatically passes to
the remaining co-owners, and the survivor(s) continue to own
the real estate. Each co-owner is able to transfer their interest
to another person, but the new co-owner does not become a
joint tenant (with right of survivorship) but rather a tenant in
common (whose interest does not automatically transfer to
the surviving owners upon their death) with the original co-
owners. One downside of joint tenancy is creditor exposure.
Because there are multiple co-owners, creditors of any of the
co-owners can go after the co-owner’s interest in the real estate Est. 1926
to satisfy their debts or claims. The creditor may be able to The Heart of Hobe Sound
force a sale of the real estate, even though the other co-owners

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