Options for How to Hold Title to Your Property

When formulating an estate plan, the ultimate goal is to effectively transfer one’s wealth to any and all surviving loved ones, at a minimal cost both emotionally and financially. For many families, the most valuable and important part of the estate is its real estate. For some, this is the family home; for others, it is valuable arable land, grazing lands, or an idyllic piece of property out in the countryside.

Yet not all real estate changes hands easily, and how one's hold title affects how it can be transferred from one individual to the next after death. When implemented correctly, an estate plan can ensure that an important piece of real estate transfers from you to your loved ones seamlessly, without unnecessary costs or interruptions. That is where your hold title comes into play.

What Does It Mean to Hold Title to a Property?

A title is a legal and contractual term describing a set of documents or a single document certifying your stake or ownership in a property, be it a car, a piece of land, a home, a part of a condominium, or a portion of a property. Titles are not used exclusively for physical or tangible things. You can hold title for a trademark, and other intangible assets.

Title also describes what rights you possess to said property, and these rights can be distributed among various different individuals. Titles are not to be confused with deeds, which are the means of transferring title from one person to another.

While titles can describe ownership over a great many things, from patents and jewelry to animals and electronics, when people speak of titles, they usually refer to more valuable assets such as cars, and real property, which is titled differently from personal property.

In the broadest sense, titles describe possession and ownership. Historically and legally, these two concepts are critical to protect property from theft, trespassing, destruction, and use without consent. In a more abstract sense, a title can represent an individual’s control over a business or the resources therein, exercising property rights over tangible and intangible assets regardless of one’s proximity to those assets.

Why Property Titles Matter

Titles are important in estate planning, as they describe the exact relationship between a person and their property, insofar how they can control it, and exercise their right to pass it onto a beneficiary through a deed. Titles are not documents that prove absolute control over an asset – rather, they specify exactly how much control one possesses over an asset.

Titles can help describe how ownership will best transfer from one person to another, through a deed. Transfer on Death deeds ensure that the property detailed in the deed is transferred to the designated beneficiary upon the owner’s death. But these are only one option. Other options include titles with right of survivorship, or ownership arrangements such as tenancy in common.

Transferring property after death helps families save time and money. This process allows you to ensure that large and valuable property is passed directly onto your kin and loved ones without passing through the probate process.

Probate can put an unnecessary halt on the transfer of assets from a decedent to their kin, as it goes through the slow and regulated process of legitimizing an executor for the will or estate, establishing the estate, evaluating it, managing it, and eventually distributing it after a sufficiently long time period has passed to allow creditors to settle any debts the decedent might have had.

However, the simpler and smaller the portion of the estate eligible for probate, the simpler and faster the probate process. While some methods of avoiding probate require a significant amount of prep, utilizing the right deed to transfer the title of property from one person to another upon death can be quite simple.

Examples of Ownership in California

The nature of your title helps describe the best way to transfer property for estate planning purposes. Below are the five most common types of ownership in California, and their various pros and cons. Understanding your hold title can help you figure out the most cost-effective way to transfer property to your kin after you pass away, and minimize the potential hassle of probate.

Sole Ownership

You do not have to start a family to have loved ones. If you are single, it’s likely that the property you own is under your sole ownership. This also often describes property acquired before marriage. Any property acquired while married is likely to be owned by both you and your partner, unless your partner specifically signs a legal document avowing all interest in that property (this is called a quitclaim deed).

Property under sole ownership is not in a trust and does not have beneficiary designations. It must go through the probate process, unless you alter your title or put the property in a trust.

Joint Tenancy With Rights of Survivorship

Joint tenancy with rights of survivorship means that the other owners within the joint ownership automatically receive the portion previously owned by a recently deceased owner.

To put this in practical terms, if John, Jane, and James own one third of a property each, and James dies, then John and Jane each inherit half of his third (16.65 percent of the property’s whole value). When either John or Jane passes away, the surviving owner has full rights to the property and can do with it as they please.

Community Property

In California, married couples who acquire property together own it through community property title. This essentially establishes that they each own half of the property they buy and said half can be transferred either to the surviving spouse when one of them dies, or someone else.

For example, you could give your half of your home either to your partner or designate one of your children as the beneficiary of said 50 percent. This can be applicable in cases where married couples are separated, and not yet divorced. Intangible property, such as patents, may also be held technically as community property.

Tenants in Common

Joint tenancy restricts what a person can do with their share of the property. Their portion will go on to their co-owners when they pass away. However, tenants in common may own property with other co-owners, with the ability to sell or transfer their portion to others.

Living Trusts

When property is put into a trust, some control over the property is lost by the trust’s grantor, and the property is put in the hands of the trustee once the grantor passes away. It is the trustee’s responsibility to see the property handed over to the right beneficiary.

The details of how this is done depends on the nature of the trust, which may be revocable or irrevocable, affecting a grantor’s rights over their old property, as well as certain conditions such as whether the property counts as part of the grantor’s estate for tax purposes, and whether it is protected from creditors.

The exact way in which you own something determines your options when it comes to transferring it to your loved ones. Some titles require you to pass a property through the probate process, while others allow you to automatically transfer a title upon death. Some restrict to whom said title can be transferred, while others let you make that choice. Knowing your hold title can be a great advantage in estate planning.