To make things easier for your loved ones, it is necessary to spend some time on estate planning. Making a will and clearly describing who owns what should help avoid lengthy and costly court cases. However, sometimes taking such proactive steps may not be possible due to various reasons. In such cases, it brings up the question as to what happens to your property after you die. Here are some facts that will help you better understand the topic.
Title of the property
What happens to your property after death will depend a lot on how the property is titled. For example, it can be sole ownership where you are the sole owner. There is no designated person who is supposed to inherit or get control of the property after your death.
Another common property title is joint ownership with right of survivorship. In this case, the property after your death will be equally distributed to the joint owners. It is to note that joint owners cannot give their share to anyone else. Co-owners will have first right on the property when any of the joint owner dies.
For married couples, there’s a special type of joint ownership referred to as ‘tenancy by the entirety’. This is applicable in most states. Under this, neither individual is allowed to bequeath, encumber or transfer the property without the consent of other individual.
Some states have ‘community property’ joint ownership rule for married couples. Under this rule, any one spouse can transfer 50% ownership to anyone they want after death, as per their estate plan. However, if they do not have an estate plan or will, the surviving spouse will inherit the entire property.
Who gets property after owner’s death?
This will depend on whether the property is probate asset or non-probate asset. Non-probate assets means that there is already a legal heir to the property. It could be beneficiaries mentioned in the estate plan or surviving co-owners of the property. In case of non-probate assets, a court case is usually not required to decide the new owner of the property.
In case of probate assets, the next owner of the property is decided via a court-supervised process. This usually happens when the deceased has left no will and does not have an estate plan. Probate assets cover tenants in common property, sole ownership property and joint ownerships assets without right of survivorship.
In case of probate assets, ownership preference is usually given first to the surviving spouse. Direct descendants are next in terms of preference. Distant relatives very rarely are given ownership of the property. Distant relatives can inherit property only in specific cases where there is no living spouse or children of the deceased. Or if the deceased never married and never had children.
The court will look into various factors to decide the legal owner of the property. Intestacy laws of the respective state where the owner used to live at the time of death will be considered. Intestacy laws of the state where the property is located will also be considered to determine the next rightful owner(s) of the property.