Posted by Calnotary on 9/14/10 3:12pm
Msg #352656

What's the difference between joint tenants, etc

The other day one borrower asked on the different vesting he could have choose for tax purposes.

I told him to call his CPA or Tax Attorney.


But what is the difference between the following:

Husband and wife as joint tenants,

Husband and wife as Joint Tenancy with Rights of Survership<<spelling?

Husband and wife as community property.

And this is not a test, just wondering what you guys think.

Reply by Lee/AR on 9/14/10 3:15pm
Msg #352658

The words...

Reply by Calnotary on 9/14/10 3:20pm
Msg #352660

No, Lee I don't think that the difference are just the words. I think that it have some type of tax consequences
when the property in passed to the living spouse and if the deceased had any personnel debts. But let's see if we hear from someone that knows. Paul?

Reply by Linda_H/FL on 9/14/10 3:27pm
Msg #352662

Joint Tenants - no survivorship = Tenants in Common - property passes at death of one to the decedent's heirs (think maybe second marriage for both - decedent has children from previous marriage - he dies, his kids get his share of property, doesn't go to wife automatically, although she may have entitlement)

Joint Tenants with survivorship - property passes at death to the survivor.

Joint Tenants community property - never heard of this. http://www.ggu.edu/school_of_taxation/tax_news/attachment/Jim+Henderson+Article.pdf

Maybe this will help too. http://public.findlaw.com/abaflg/flg-5-1c-5.html

Reply by Tess on 9/14/10 3:34pm
Msg #352665

I would say for taxes:

1. Yes, at the death of one of them
2. No
3. Like Linda ???

Reply by JanetK_CA on 9/14/10 4:14pm
Msg #352679

Guess I should have read links before posting.

Thanks for looking this up, Linda.

I think the first link gets to the crux of the issue, although this stuff makes me want to roll my eyes back into my head... Far be it for me to try to interpret any of this, but it sounds to me like the key points are whether or not the tax basis gets adjusted for one or both upon death, and whether or not any creditors can go after the surviving spouse's interests.

I can see where this could get very complicated for lots of people - especially where both individuals have careers, one or both may have previous marriages, perhaps with children, etc., etc. All the more reason for people to consult with an expert.

Reply by JimAZ on 9/14/10 9:45pm
Msg #352715

Wow,,,u must be an attorney, but very confusing. After seeing this I think I live in a community property state, so don't need to be concerned. Let me know if I am wrong.

Reply by JanetK_CA on 9/14/10 3:55pm
Msg #352671

I think in California it can - and does - make a huge difference - in terms of tax consequences, cost basis and even distribution to heirs, as someone else alluded to. And this is something that likely varies greatly from state to state - and from couple to couple.

I'm no expert on this (nor do I want to be) but I've heard estate planning attorneys talk about this (and I used to have a brochure from a title co that very briefly explained the differences - but I can't find it at the moment). Seems to me attorneys more typically recommended "Community Property with Rights of Survivorship". (If I'm remembering that right - mental card file isn't processing at peak right this moment. ) Also, that's what I think I see most often when a couple has consulted an attorney about their vesting. The most common vesting I see, though, is "joint tenants", probably because that's the default their realtor either told them or filled in for them when they didn't ask. And it wouldn't surprise me if they did so just because that's what they usually see...

So I would NEVER get into discussion about this with a borrower. A referral to a good estate planning attorney - or maybe even a CPA - is probably the way to go. Or at least suggest they research it themselves. Everyone's situation is different, but I've heard enough to believe that people should probably pay more attention to this issue than they do.

Reply by Doris_CO on 9/14/10 4:02pm
Msg #352673

Like Janet, years ago I heard an estate lawyer discuss the difference in the wording and both Linda and Janet are right. How the property is dispersed and/or taxes are paid is dependent on how the vesting is worded. And, of course, it depends on the state the property is located and what laws would apply in that state.

Reply by PAW on 9/14/10 5:38pm
Msg #352689

From Chicago Title Insurance Company

https://www.ctic.com/commontitle.asp

Another good article http://homebuying.about.com/od/marketfactstrends/a/110308_TitleOpt.htm

Reply by Lee/AR on 9/14/10 7:09pm
Msg #352699

I stand by my answer. Wouldn't get into any discussion of tax consequences... or anything else, for that matter. It can be very simple or extremely difficult depending upon circumstances and my pat answer would always be 'consult your attorney'.

Reply by Philip Johnson on 9/14/10 3:43pm
Msg #352667

Years they got at their sentencing:) n/m

Reply by Linda_H/FL on 9/14/10 3:47pm
Msg #352668

LOL PHilip..:) n/m

Reply by Tess on 9/14/10 4:13pm
Msg #352678

Re: Only what I think, not what I would say! :) n/m

Reply by Hugh Nations Signing Agents of Austin on 9/14/10 5:07pm
Msg #352685

Not really, Phil: It's the type of joint they're toking n/m

Reply by Marian_in_CA on 9/14/10 4:08pm
Msg #352675

I'm taking class in Real Estate law right now, and we actually just covered this. I'm still trying to wrap my head around it.

If a husband and wife own a home in community property, they can will their interest in the property to somebody other than their spouse. That's kind of the kicker, I think.

According to my textbook (on CA real estate law), the qualities of each are:

Joint Tenancy: Equal Right to Possession, Equal Interests, Rights of Survivorship, each owner can convey undivided interest

Tenancy in Common: Creation presumed, equal right to possession, each owner can convey undivided interest

Community Property: Creation Presumed, Equal Right to possession, equal interests, each co-owner can will undivided interest

Community Property w/ Right of Survivorship: Equal right to possession, equal interests, rights of survivorship

Reply by Marian_in_CA on 9/14/10 4:12pm
Msg #352677

let me add...

"Creation presumed" is just that... that unless specifically declared otherwise, community property or tenancy in common is automatically presumed.

Reply by JanetK_CA on 9/14/10 4:24pm
Msg #352680

Re: let me add... Cost-basis can be a big deal for some, too

The one thing I heard mentioned most often is the potential impact of the cost-basis, especially for homes that still have significant value, and probably for higher income people. Any implications of that, I'll leave to the tax experts.

Reply by dickb/wi on 9/14/10 4:51pm
Msg #352682

maybe this will help...........



http://www.ehow.com/about_4691191_joint-tenancy-vs_-tenants-common.html

Reply by Susan Fischer on 9/14/10 10:20pm
Msg #352722

and I'll toss in...that if I were married, and we did the

house together, the vesting would be as Tenants by the Entirety, because no other tenancy presumes a married couple to be as one; it's cut and dried - you die, I have the house, I die, you have the house. It takes the both of us to convey any of it. (Not that there can't be a challenge, but the Law's the law, and that's where a good lawyer comes in...)

But other tenancies take into account the myriad other types of relationships and sticks in the property-rights basket.

This illustrates the necessity of experts in law and finance. The language of Property Law is either poetic, or archaic, but whatever, it's laden with the roadmaps of property ownership, succession, and so much more. The Rules for each long established Tenancy are the sticks in the Property Basket. Hiring experts on those Rules for successful estate planning and legal protection is essential, in my mind. jmho

Reply by Julie/MI on 9/14/10 4:58pm
Msg #352684

Usually for Probate purposes

MI is not community property so I'm not even going there.

Example of Joint Tenants:

Jane Doe and John Smith own a land as joint tenants with full rights of survivorship. Let's assume they are cousins.

Jane dies and now cousin John owns the property 100 percent.

Example of Tenants in Common:

Jane Doe and John Smith own land as tennants in common. Let's assume they are cousins.

Jane dies and now cousin Jane's hiers own 50 percent and along with cousin John's 50 percent.

Reply by LKT/CA on 9/14/10 10:03pm
Msg #352720

With vesting as Joint Tenants, right of survivorship does not have to be stated, it is implied. AND.....any group of people can take title as Joint Tenants, it is not just for a married couple.

With Community Property, right of survivorship MUST be stated and it only for married couples - though the RE Law book did say something about Domestic Partners taking title as Community Property. I don't have the book in front of me. If right of survivorship isn't stated in the vesting, then the children can inherit an interest upon one parent's death.

My understanding from the RE Law class is that a married couple taking title as CP with R of S has better tax consequences than taking title as Joint Tenants. I have to reread my book on this subject (too lazy to get up and get it right now, sorry).

Reply by Susan Fischer on 9/14/10 10:39pm
Msg #352725

"...With vesting as Joint Tenants, right of survivorship

does not have to be stated, it is implied."

Nevertheless, the difference between Tenants by the Entirety and Joint Tenants is precisely that point. 100% ownership is not implied (which, necessitates a construction, or construation, if you will,) it is presumed.

The difference is the remainder after the death of a joint owner. A Tenant by the Entirety is clear that the entire bucket of sticks (if fee simple) reverts to the survivor of the Union, not a further heir, or anyone else.

Not legal anything, just my understanding.

Reply by Susan Fischer on 9/14/10 11:14pm
Msg #352729

Forgot to add: Another difference is the ability to convey

any portion of the property without the consent of another owner before anyone dies - each Tenant by the Entirety has that protection, can't be done. Not so with other Tenancies.

Nothing legal here. yaddayadda.

Reply by Marian_in_CA on 9/14/10 11:51pm
Msg #352730

My RE law book points this out, too...

It notes that co-ownership of a property can easily be lost if one of them files or records a severance document without the other's knowledge. This can be a real gut wrencher of a surprise -- so the joint tenants can put, if they wish, a clause in their agreement that it cannot be severed without permission of both individuals.

The downside to that, of course, is that it could be really tricky to get out of it is one of the tenants refuses. If that happens, then we're talking about a partition action in court to force the matter.

Reply by Susan Fischer on 9/15/10 10:35am
Msg #352761

Yep. There are so many actions that can affect the intent..

Yet another reason to get expert advice - hence, the vast body of Property Law.