Thinking about our mortality is never easy, but by taking a few estate planning basics into account, we can make sure that sorting out issues such as property will be easier for our loved ones
While property is only one aspect of estate planning, it is essential to understand the different types of property along with how to accommodate them in your plan.
Types Of Property
We all know the basic definition of property in the sense that it is what one owns, but in the realm of estate planning, not only are there different types of property, but attorneys handle all of them differently.
Tangible Personal Property
This is the most basic form of property and generally includes objects you can physically touch. Tangible property may include clothes, tools, documents, art, electronics, furniture, and jewelry.
Intangible Personal Property
A basic rule of thumb is that this type of property is anything that cannot be physically touched. Intangible property may include bank accounts, retirement plans, investments, stocks, bonds, interests, copyrights, and insurance policies.
Real Property
Though real property can be touched, it cannot be physically moved as it includes land and the assets attached to that land. Real property may include land, buildings, crops, fences, minerals, ponds, and roads.
Property Titles
With many types of property, especially intangible and real property, it is common for it to be owned by more than one person or exist within a trust or partnership. Estate planning attorneys will often break down the ownership of property in three ways:
Sole Ownership
This is property such as bank accounts or real property that are solely in the owner’s name and are not specifically designated to be paid, trusted, or transferred to someone upon the owner’s death.
Joint Ownership
This becomes more complicated than sole ownership considering it can be broken down into “with rights of survivorship” and “without rights of survivorship”:
- With Rights Of Survivorship: Surviving owner continue to own the entire property upon the death of co-owner. This is generally known as joint ownership with rights of survivorship. (JTWROS). A married couple can hold real property as tenants by the entireties, which is a special type of joint ownership reserved to married couples and gives them extra protection from creditors.
- Without Rights Of Survivorship: The living owner has no right to the share of the deceased co-owner’s property, and it is left to their estate. This is known as tenants in common.
Title By Contract
For estate attorneys, this is the easiest type of property title as it is any property that has a specific beneficiary named to be paid, transferred to. Title by contract can be applied to any property, as long as it does not exist in joint ownership with rights of survivorship.
Where Property Goes After Death
Determining the title of individual properties isn’t the final step for what happens to your property upon your death. The deceased’s property will then be decided as probate or non-probate assets.
Non-Probate Property
This is property which does not need to be proven. Non-probate property includes joint ownership with rights of survivorship and sole ownership property with a named beneficiary.
Probate Property
This is property that will have to go through probate court to determine new ownership. Probate property is common for joint ownership without rights of survivorship or other property that does not have a clear beneficiary.
Where To Start
Considering property is a very general term for an extensive amount of possessions, the first step to proper planning would be to make a comprehensive inventory of the property you own. While it may be hard for individuals to decide who to will any sort of property to, non-probate property is beneficial as it will save your family time, money, and stress.
Other tips to consider making your property estate planning easiest for you and your family include:
Plan Early
The earlier you start estate planning, the more time you will have to add property and make decisions.
Keep Plan Up-To-Date
By keeping your estate current, including selling of property and changes to your retirement plan or insurance, it will prevent confusion for your attorney and family.
Without an estate plan, your property will be intestate, meaning that it will be left up to the state statutes and courts to determine who inherits your property. Not only is this impersonal, but it may also prevent your loved ones from receiving specific property as per your intentions.
Estate planning is complicated – especially when it comes to property. If you have questions or are ready to begin your plan, call Handin Law today at 1-877-815-4560.