Why Is Titling Property Correctly So Important For Homeowners?
First, if titled incorrectly, the property owner cannot control what happens to the property after he dies; second, if titled incorrectly, the heirs can lose the property to creditors, the government, or even an ex-spouse; third, if titled incorrectly, the heirs will have to pay capital gain on the sale of the property.
3 Common Ways to Hold Title
Joint Tenancy
The worst part about joint tenancy is the owner who dies first cannot control what happens to the property after his or her death. Joint Tenancy ensures that there will be a probate upon the death of the second joint tenant. Finally, the surviving joint tenant will pay capital gain on one-half of the property after the death of one joint tenant.
Community Property
Possibly the most common way for married couples to own property, Community Property causes half of the property owned as community property to be probated upon the first death, and the whole property must be probated upon the second death. Probate is not fun- it is time-consuming and costly!
Community Property W/ Right Of Survivorship
Like joint tenancy, CPw/ROS is a “he who dies last wins” situation, because the surviving owner controls the disposition of the property on her death.
The Best Way To Own Property
A Revocable Living Trust
The best way for your homeowners to own their property is in a revocable living trust.
A properly drafted and funded trust will avoid time-consuming, expensive, and public probate upon the first death and the second death.
A revocable living trust will make sure that the right people receive the property after the death of both owners and that it doesn’t go to creditors, predators, or future spouses.
Property received by the heirs can be sold free of any capital gain tax and can be protected from creditors and predators of the heirs.
The property owners can maximize both $1,500,000 coupons against estate tax and save their family $700,000 of estate taxes on a $3,000,000 estate.
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This article is a service of Legally Remote, PLLC, a local Alachua / High Springs, Florida Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Life & Legacy Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life & Legacy Planning Session™.