How names appear on deeds matters greatly. In some states, like Missouri, this defaults to tenants in common. For both estate planning and asset protection purposes, how names are listed on a deed will be extremely import when things go wrong. Many couples may have purchased a home years ago with the original deed titled as “William Smith and Wilhelmina Smith”. With Wilhelmina being William’s wife for decades, they thought it was time to think about changing the title to William Smith and Wilhelmina Smith, joint tenants with right of survivorship. Oftentimes couples acquire real estate prior to marriage, but don’t “re-deed” the property to themselves as a married couple. This can cause huge problems.
The Washington Post’s recent article entitled “Changing a home title from ‘tenants in common’ to ‘joint tenants’” looks at whether this would result in any adverse consequences, such as issues with the title insurance or taxes issues.
When you own a home in joint tenancy, should either of the owners die, that owner’s interest automatically goes to the surviving joint tenant. However, when people own a home as tenants in common, each person owns a specific share of that home. Therefore, our hypothetical couple William Smith and Wilhelmina Smith each owns a 50% interest in the home. If either of them were to die, his or her 50% interest in the home would be distributed, as provided in his or her will or as provided by state probate statute.
If people purchase a home but don’t specify how they want to own the property, in most situations, the state law will say how the parties take title to the property when the deed is silent.
You can typically record a new document that puts both William Smith and Wilhelmina Smith on the title to the home, as joint tenants with rights of survivorship. When it’s a simple change in the title from tenants in common to joint tenants, most state tax authorities will ignore that change.
To be sure you should ask an experienced estate planning attorney or the office that collects or assesses values in your location for more information. However, it’s a pretty safe bet that the change won’t affect a home’s value.
As far as the title insurance policy, after so many years, it would be doubtful there would be any problems. That’s because the original title insurance policy named William Smith and Wilhelmina Smith as the insured. If they change the ownership from tenants in common to joint tenants, the Smiths are still the owners of the home and still named on that policy.
Reference: Washington Post (July 6, 2020) “Changing a home title from ‘tenants in common’ to ‘joint tenants’”
Suggested Key Terms: Estate Planning Lawyer, Wills, Intestacy, Inheritance, Asset Protection, Tenancy in Common, Joint Tenancy