Chances are, your home is your most valuable asset. So, it’s essential to understand the legal terms of ownership, particularly if property ownership is shared. The manner in which you hold legal title to your home determines what should be done if your partner dies.

Here are the basics that you need to know in Massachusetts:

Joint Tenancy with Rights of Survivorship

In this form of joint ownership, each partner owns an undivided and equal share of the property and has a right to use and enjoy the entire property. When one partner dies, their share ceases to exist, and ownership of the entire property passes to the survivor(s). No probate is necessary to convey legal title to the survivor.

Tenants by the Entirety

This arrangement is only available to married couples. Each spouse has an equal, undivided interest in the property plus right of survivorship. No probate is required to convey legal title to the survivor. A married couple is considered to be a single legal entity. Each spouse receives protection from creditors of the other spouse.

Tenants in Common

Unlike the previous two joint ownership arrangements, tenants in common have no right of survivorship.. When one tenant in common dies, their share does not automatically pass to the other tenants. If the deceased had a will, then ownership of their share is passed to their devisees. Without a will, the deceased’s share is distributed to their heirs according to the Massachusetts intestacy statute.

Gerald and Ginny owned two homes—a personal residence and a vacation home on the Cape—throughout their 40-year marriage. Although they purchased their primary home after they married, they had purchased the Cape Cod home as tenants in common prior to marrying and never changed the designation on the deed. Ginny had financed more of the vacation home purchase and owned a 60 percent share, and Gerald, 40 percent.

Gerald had two children from a previous marriage, but he was estranged from them for many years. Ginny and Gerald also had three children together. Their close-knit family frequently enjoyed spending time at the Cape Cod residence.

Unfortunately for all the children, neither Ginny nor Gerald had wills. So, when Gerald died, his estranged children inherited from his 40 percent share of the Cape property, along with his three children with Ginny, as well as Ginny’s estate—a six-way split. When Ginny died a few years later, her 60 percent share of the Cape property passed to Gerald’s and her three children.

Now all five children own shares of the Cape Cod residence as tenants in common, but children from the second marriage own larger shares than Gerald’s children from his first marriage—a recipe for conflict over upkeep, improvements, and selling their shares (not to mention bad feelings from Gerald’s first marriage). Any one child’s decision to sell or make changes to the property sets up a battle in Probate Court.

If you are in the process of buying property with a partner, friend, or family member, attorneys at Mountain Dearborn will be pleased to advise you about joint ownership arrangements and estate planning to suit your needs. Please contact us for a consultation.

Image: Brian Babb