Do I Want My Property To Be “Joint?”
This is a simple question, but determining the answer is far from simple. You must consider a variety of factors. This is a routine matter for consultation in our office. Concerns of avoiding expensive probate proceedings and other costs upon death are the main reasons that cause our clients to consider holding the title to property with some form of survivorship. There is a lot of advertising on television and radio about using some type of joint ownership. We are glad to draft deeds to create joint-ownership, but each tenancy (form of ownership) has advantages and disadvantages. A brief summary of the various forms of ownership may help you to begin to understand the options, but, of course, a complete discussion would cover far more than a few pages.
Sole Ownership
Sole ownership has the advantage of great control. If the property is your home, homestead protection gives very substantial protection against the claims of creditors (subject to certain limitations on new homesteads under federal bankruptcy laws). If the owner is married, the spouse of the owner must still join in any deed or mortgage to convey or encumber the property. There are limitations on your right to give the homestead to anyone but your spouse in a will. For other property, upon the death of the owner, the property passes pursuant to the will of the owner, and if there is no will, subject to the Florida statutes under what is known as “intestate succession.”
Tenancy by the Entirety
Tenancy by the entirety is a form of joint ownership that is available only to property held by a husband and his wife. The ownership by the two of them is absolute. Neither can convey or mortgage the property during the marriage without the joinder of the other spouse. This form of ownership has a unique protection in the event one of the parties to the marriage is sued and judgment entered against that spouse (i.e. auto accident case or a physician being sued for malpractice). Even if the property is not homestead, a judgment lien against one spouse will not create a lien on the tenancy by the entirety property. Upon the death of one, the other automatically owns the property absolutely without regard to the will of the deceased spouse. If you divorce, the property converts to a tenancy in common, unless the judge rules otherwise.
Joint-Tenancy with Right of Survivorship
This is a joint-tenancy with right of survivorship by persons who are not legally married. Each party has the full right of possession jointly with the other owner or owners (if you own the property jointly with your children, they can move in even if you don’t want them there). The property can only be owned in equal shares. If you create a joint-tenancy with family members, you are not at liberty to require them to convey it back. In a joint-tenancy with a child that does not live at the home, a judgment against that child encumbers the child’s interest and the judgment-holder can actually become your co-owner. If a joint-tenant conveys his or her interest separately from the entire interest, the survivorship rights are terminated and it becomes a tenancy in common. If you get at loggerheads, the only remedy is "partition." For a home, partition essentially has the court sell the home, with the attorneys keeping most of the money. In Polk County, a full homestead tax exemption is given if one of the joint tenants lives there.
Tenancy in Common
Tenancy in common allows each person to hold an interest in the property, and to convey his or her interest separately. Each party has the full right of possession jointly with the other owner or owners (if you own the property jointly with your children, they can move in even if you don’t want them there). If you create a tenancy in common, you are not at liberty to require them to convey it back. In a joint-tenancy with a child that does not live at the home, a judgment against that child encumbers the child’s interest and the judgment-holder can actually become your co-owner. If one tenant in common dies, his or her will controls the disposition or, in the absence of a will, the Florida statutes for intestate succession control the disposition. This is also subject to the opportunity and peril of partition. If only one of two tenants in common lives on the property, the property gets 1/2 of the homestead tax exemption.
Classic Life Estate
With a classic life estate, the life tenant owns the property during his or her life and the remainderman owns the land for the period of time after the death of the life tenant. To sell the property, generally both the life tenant and the remainderman must sign. The remainderman has no homestead rights in the property, although the life tenant can get the full homestead exemption. The holder of a judgment against the remainderman can execute on that remainder interest immediately. Upon the death of the life tenant, no probate or other administration is necessary and the holder of the remainder interest is automatically the owner. The life tenant is responsible for the maintenance and the payment of taxes on the property during his life. Neither can force the other to sell or divide the property, and partition is not available.
“Ladybird Deed”
A “ladybird deed” creates a life estate and a remainder interest like a classic life estate, but with a new twist. The life tenant retains the right to sell the property during the lifetime without the consent of the remainder tenant. This allows the life tenant to sell the property and actually keep the proceeds. If there is friction between the parties, we would caution you that the exact parameters of the rights of the parties are not totally set forth by either statute or case law. For example, lawyers debate whether the life tenant can "take back" the property without selling it at arm's length.
Conclusion
The above is a very brief and incomplete explanation of the forms of ownership. For example, if you strictly construed the discussion above, in certain situations, your conclusion would be wrong. The use of revocable or living trusts is beyond the scope of this article. The best way to own property depends on the family situation. If there are health issues that may require Medicaid, that eligibility must be protected. Anyone who tells you it is a simple decision with a one size fits all attitude is not serving you well. Consulting an attorney who actually asks questions and gives advice, may cost more now, but can avoid big headaches down the road.
