How Titling Real Estate Correctly Gives You Options for Passing It On

How Titling Real Estate Correctly Gives You Options for Passing It On

When making a real estate purchase — whether it’s home or an office building — many people don’t give much thought to how the property should be titled. But if you want to pass the property on to a spouse or others some day, how you title it has an important role in how it is passed on.

Here are your options for titling your Florida home:

Sole ownership — this is commonly used by property owners who are single or who have a spouse in a high-liability profession, such as a doctor, or is someone who has creditor, gambling or substance abuse problems.

Joint tenants — when two or more people own property together and are not married to each other, the title is usually held as a joint tenancy with right of survivorship. Holding title in this manner allows the property to pass automatically to a surviving owner after the first owner dies without having to go through probate.

Tenancy by the entireties — only legally married couples may take title as tenancy by the entireties and must do so at the same time during the marriage. With this form of title, one spouse cannot transfer their interest in the property without the consent of the other spouse. This type of titling also provides asset protection for married couples that is not available with joint tenancy.

Tenants in common — this is where two or more people own property together. Under this type of property title, each owner has the share of the property and may pass that share on to heirs. In addition, each owner has the option to sell or lease their share without the approval of the other owners.

Life estate — this type of ownership is limited by the life of the owner, and may be passed to a beneficiary automatically upon death.

Title to property in Florida can also be held by a separate legal entity, including a corporation, limited liability company (LLC), or partnership. Property owners may also create a Florida Land Trust, where the property is titled in the name of the trust for the benefit of the trust’s beneficiaries.

A word of caution

It is not uncommon for elderly homeowners to transfer title of their homes into the name of a child (or children) in hopes of reducing estate taxes, avoiding probate or to protect the home in case of long-term care claims. However, this can be a clumsy – and potentially disastrous — way of trying to accomplish these important estate planning goals.

Probably the #1 reason to proceed with caution is that that by transferring your home to your children, you put your home at risk for their bad personal and/or financial decisions. Your home could become a battleground in a divorce property dispute, or laid claim to by creditors. Certainly this is not what you intended, but it happens every day.

The attorneys at Jurado & Farshchian, P.L. combine their knowledge and experience in real estate and business law with a commitment to personalized, detail-oriented legal services. Contact one of our experienced Florida real estate attorneys at (305) 921-0440, or email us at info@jflawfirm.com.

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