Joint tenancy has been a popular way to own property primarily because it is a way to transfer property. It is one way in which two or more people can own real property together. Perhaps the popularity has been due to a large extent to a lack of knowledge of the disadvantages.
The outstanding characteristic of joint tenancy is that when one joint tenant dies, ownership passes to the surviving joint tenant or tenants. Usually it is a husband and wife who are joint tenants, but unrelated persons may be joint tenants. It is sometimes desirable for married couples to own checking accounts and motor vehicles as joint tenants in order for the surviving spouse to have prompt access to those items during settlement of the estate.
Advantages
• Fewer court proceedings are needed to clear up the survivor’s rights. Usually less time and costs are involved in proceedings to terminate a joint tenancy than in a probate. The proceedings to terminate joint tenancy between spouses have been reduced even further. The surviving spouse may obtain a merchantable title to real property in joint tenancy with rights of survivorship by filing the following documents with the County Clerk, as provided by Title 58 O.S., Section 912.
1. A certified copy of the death certificate.
2. An affidavit by the surviving joint tenant stating that the decedent named in such certificate is one and the same person as the joint tenant named in a previously recorded document by book and page where recorded.
The document itself satisfies this requirement as to recording information.
3. If property is held in joint tenancy other than only with the spouse, a waiver or release by the Oklahoma Tax
Commission of their estate tax lien must also be filed.
• It is easy to create a joint tenancy. Usually executing a deed naming all the parties is necessary, but the courts have been strict in requiring language to show that the grantor intended a joint tenancy and not tenancy-in-common. Use of the words “and/or” alone is insufficient to create a joint tenancy.
Disadvantages
• Very few farmers own all property in joint tenancy; therefore, if probate proceedings are required for part of the estate, much of the advantage of simplified legal proceedings is gone.
• Gift and estate taxes may be higher when property is held in joint tenancy than when property is held in one person’s name. For example, if a widowed mother puts her farm in joint tenancy with her son, a gift tax may have to be paid if the value of the child’s half interest is great enough. Then, when one joint tenant dies, the entire value of the farm may be subject to both federal and state estate taxes. However, the value may be reduced by the amount that the executor can prove was furnished by the surviving joint tenant in acquiring the property but contribution to the purchase price is sometimes difficult to prove. This may be costly. The marital deduction avoids this problem in cases where the joint tenants are married to each other. Once parents transfer property to a child in joint tenancy, they cannot change their minds. An individual may change his will at anytime.
• The child could sell his interest to the farm if he so desired.
• The joint tenancy can be severed by a judgment creditor proceeding against the land belonging to the joint tenant against whom he has had judgment.
• A parent holding title to property in joint tenancy with several children might have difficulty in mortgaging the property.
• The right of survivorship may create unfair distributional results. For example, if a widow or widower remarries,
places inherited property in joint tenancy with the new spouse, and dies before the new spouse, children may be disinherited. The property would belong to the surviving joint tenant and will eventually go to the surviving joint tenant’s heirs unless the survivor’s will designates otherwise.
• Conflicts may arise between the joint tenants concerning management of the property.
• Large estates held jointly may increase estate taxes compared to most alternatives.
June 23rd, 2009 in
Kinds of Property | tags:
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Real property may be owned by one or more persons. Ownership may be classified by 1) type of estate and 2) if one or more people are co-owners, by type of co-ownership. Estates are a means of measuring ownership in terms of duration or a specific length of time. Leasehold estates involve a right to possession and use of property for a designated limited time period. Freehold estates are of potentially infinite duration or last for an unpredictable length of time. Types of freehold estates include fee simple ownership, life estate, fee simple determinable, and fee simple estates subject to condition subsequent.
• Fee Simple Ownership. Ownership of real estate in fee simple gives an unrestricted right to sell, mortgage, or dispose of the property during life or at death. It is the most complete estate that can be owned in land and includes all of the privileges of land ownership. All other types of freehold estate involve a subdivision of a fee simple estate into two estates: a present interest and a future interest.
• Life Estate. A person with a life estate in a farm who has the use of the farm during his or her lifetime is called a life tenant. Although the life tenant can sell the life estate, the buyer would have ownership rights only as long as the original life tenant lived. These rights do not become part of the life tenant’s estate. At the death of a party holding a life estate, the person or persons owning the reversion or remainder interest (all rights not held by the life tenant) would come into possession of the property. If the original owner of the property retains the right to possess the property after the death of the life tenant, this interest is known as a reversion. If the original owner gives the future ownership right to someone else, the future interest is called a remainder and the holder is the remainderman. The owner of a reversion or remainder interest can sell or mortgage his or her interest prior to the death of the life tenant, but the buyer could not obtain present possession of the property until after the death of the life tenant.
In the case of homestead property, rights similar to those under a life estate are given to a surviving spouse.
The surviving spouse may continue to occupy the homestead and receive the income from the property to the exclusion of all adult heirs. The surviving spouse’s interest is similar to a life estate in the homestead, and it would endure so long as the surviving spouse occupied the homestead as his or her home. However, in the case of homestead property, the surviving spouse’s interest is personal and may not be sold or transferred to anyone else.
Conflicts sometimes arise between the life tenant and the remaindermen. The life tenant does have some legal responsibilities that help protect the interests of the remaindermen. The life tenant must avoid waste, which is the unreasonable use of the land that results in injury to the land. The injury must be permanent and affect the future possession and condition of the land. The life tenant must also pay ad valorem taxes and interest on mortgages on the property. The life tenant cannot force remaindermen to contribute to the cost of improving the property unless they consent to do so, even though the remaindermen may benefit from the improvements.
The value of the property in which the owner has reserved a life estate must be included in the estate of the life tenant. However, if the life estate is acquired by gift, inheritance, or will the value of that property would not be included in the life tenant’s estate.
• Fee Simple Determinable. This type of estate arises when property is conditionally transferred for a specific use but will revert back to the original owner or will go to the designatee if it ceases to be used for that purpose. For example, property might be given for use as a church but the grant might specify that if the property ceases to be used as a church, the property will once again belong to the original owner. In such a case, the church owners would have a fee simple determinable estate and the original owner would have a possibility of reverter.
• Fee Simple Estates Subject to Condition Subsequent. These estates are very similar to fee simple determinable estates. The chief difference is that in the case of a fee simple determinable estate, the property ownership automatically goes to the future interest holder if the condition is broken, whereas in this type of estate, the future interest holder must take some action to gain title to the property after the condition is broken. If the interest holder fails to take any action, the holder of the Fee Simple Estate Subject to Condition Subsequent will continue to own the property. In this type of estate, the future interest holder has a right of reentry if the original owner retained the future interest or a power of termination if the right was given to someone else. Great care must be taken in creating either a fee simple determinable estate or a fee simple estate subject to condition subsequent to ensure that the wishes of the grantor are fulfilled.
There are two general kinds of property, called “real property” and “personal property.” Real property consists of land and the permanent improvements on it. Personal property includes movable items. Personal property may include tangible objects such as livestock, machinery, and household goods or intangibles such as bank accounts, bonds, stocks, and negotiable notes. The law makes a distinction between real and personal property in matters of inheritance, sale, and mortgage. Also, tax laws and assessments are applied differently to each of these two kinds of property.
May 22nd, 2009 in
Kinds of Property | tags:
Kinds of Property |
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