Why Title Matters in Oklahoma
Real estate can take on different forms of ownership depending upon the number of parties and the unique circumstances involved. Understanding how your real estate is owned, or “titled,” is necessary because this determines the extent of control you have over your real estate, how susceptible your property is to creditors, and what will happen to it upon your death. Below are some of the common ways in which real estate is owned.
As the sole owner, you have full control over the real estate. However, although the bankruptcy code offers some protections for personal residences, should you have creditor issues, the real estate could be vulnerable to being taken to satisfy debts or creditors’ claims. Additionally, at your death, the real estate will be transferred to the individual(s) named in your will (or trust) or according to state law, both of which will require probate court involvement to transfer ownership to your heirs.
Tenants in Common
When several people own real estate as tenants in common, the entire property is owned by the group, meaning that no one person can claim ownership of a specific portion of it. However, the more co-owners, the higher the possibility for creditor issues. Although creditors can only collect from the co-owner that owes them money, they may be able to force a sale of the real estate to satisfy their claim. Upon a co-owner’s passing, their ownership interest will transfer to whomever the co-owner has specified in the owner’s will or by state law if no estate plan was prepared. Both options require the real estate to go through the probate process.
For this type of ownership, also known as “joint tenancy with right of survivorship,” two or more individuals own an equal and undivided interest in the real estate. When one of the owners dies, their interest automatically passes to the remaining co-owners, and the survivor(s) continue to own the real estate. One downside of joint tenancy is creditor exposure. Because there are multiple co-owners, creditors of any of the co-owners can go after the co-owner’s interest in the real estate to satisfy their debts or claims. A benefit of this type of ownership is that ownership is transferred automatically at death, avoiding probate.
In a Trust
Another option for real estate ownership is to transfer it to a trust. The control and benefits can vary depending upon what type of trust is being used. If the real estate is in a revocable trust, then you will have the utmost freedom to manage it if you appoint yourself as the trustee and name yourself as a beneficiary. But if it is in an irrevocable trust for asset protection purposes, the selection of the trustee and beneficiaries becomes more complicated. One of the primary benefits of transferring ownership of your real estate to a trust is that at your death, the real estate does not have to go through the probate process. This is because the trust, not you, is the owner, and the trust can never die.
The title of your real estate can play a large role in how your estate plan is set up, and if your real estate is not titled properly, it can completely undo your intent for your estate planning. Give us a call today so we can review your deeds and create an estate plan that will protect your property for future generations. You can reach us at (405) 928-4075.