When it comes to drafting your estate plan, there is no “one size fits all” plan. If you jointly own real estate in Massachusetts, the type of joint ownership may affect your estate planning.
The three types of Joint Ownership in Massachusetts are Tenancy in Common, Joint Tenancy, and Tenancy by the Entirety. Each type of joint ownership can affect your estate in various ways, and it is important to seek legal counsel to understand the benefits and consequences of each type of ownership to create the appropriate mechanism to transfer title for estate planning purposes.
In a Tenancy in Common, each owner holds an individual, undivided fractional ownership interest in the property. Each owner has the right of entry, occupation, enjoyment, and transfer of his ownership interest. Because there is no right of survivorship (title does not automatically pass to the other tenants) with this type of ownership, upon the death of one tenant, his interest will pass by will or intestacy. This means that a probate will be necessary to transfer the title to his beneficiary, unless his interest is held in trust.
A Joint Tenancy provides for a right of survivorship, and as such, upon the death of one joint tenant, the remaining joint tenant(s) take title by operation of law. This type of tenancy is convenient because it avoids probate, and the joint owners can handle the financial affairs of an incapacitated joint owner. Creditors of only one joint tenant can, however, obtain a judgment and levy the entire property.
A Tenancy by the Entirety is a form of joint ownership only available to married couples that includes a right of survivorship. The purpose of this type of ownership is to protect a married couple’s right to live in the home against a creditor’s claim against one spouse. Once a couple divorces, the tenancy is severed and the former spouses own the property as tenants in common.
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