Personal Finance: Ask the Experts

Get advice on money matters from The Bee's Claudia Buck and a panel of local experts

July 20, 2013
What happens at death when title to real property is held as tenants-in-common?

Q: Several years ago, I signed a Grant Deed naming my daughter and son as Tenants in Common for my house when I pass on. My home is the only asset I have and an attorney said this would be a Life Estate, so I would not need a last will. When I pass, and the house is sold, do both of my children have to share in the proceeds equally, or is there another option for disbursement? Thank you.

Jeanne, Sacramento

A: In order to answer your question, I need to review the facts you have provided about your situation. You state that you and your children hold title as tenants-in-common. This means that each of you holds an undivided one-third interest in the property.

Unfortunately, it also means that the property does not automatically pass to your son and daughter upon your death. When a tenant-in-common dies, the deceased owner's interest in the property passes either by the terms of the deceased owner's will or, if the person does not have a will, by the laws of intestate succession.

In your situation, if you have no will and your son and daughter are your only children (and you have no deceased children), then your interest will pass to your son and daughter but a summary probate proceeding will be required if the value of your share alone is valued at $150,000 or less. There are two types of summary proceedings, depending on whether the value of your share alone is $50,000 or less or greater than $50,000 but not greater than $150,000. If your share is valued at more than $150,000, then a full probate proceeding will be required.

While an attorney may have told you that the ownership arrangement you have with your children is a life estate, this is not correct. A life estate is created when a person transfers an interest in real property to himself or herself for life, with the "remainder" in one or more persons. The person who holds the life estate is known as the life tenant. When the life tenant dies, the appropriate affidavit form is recorded with the County Recorder's Office, along with the life tenant's death certificate, and the persons holding the remainder interest then become the sole owners of the property.

If you intend for the real property to transfer automatically to your children at your death, then the deed should be titled with you and your children as joint tenants. If title to property is held in that fashion, then upon the death of one of the joint tenants, the interest of the deceased joint tenant passes to the remaining joint tenants.

Applying that to your situation, if you, your son and your daughter held title as joint tenants, then upon your death, an affidavit form is recorded, along with your death certificate, with the County Recorder's Office. Your son and daughter each would then own a one-half interest in the property. No probate proceeding would be required.

Now to your question! As title now stands, your children would first have to file either a summary probate administration or go through a full probate administration, depending on the value of your one-third share. When the property is sold, because your son and daughter each would then own a one-half interest, your son and daughter would divide the proceeds equally. If your deed was changed so that you held title with your children as joint tenants, the result would be the same, but there would be no probate proceeding.

Your question makes me wonder if you are considering an option other than your son and daughter sharing equally. This may be tricky because, as it now stands, each of your children currently owns a one-third interest in your property and you cannot control the disposition of their shares without their consent or without making a change to the current title.

Under these circumstances, you may want an experienced estate planning attorney to review your deed and make a recommendation to ensure that your wishes concerning your real property are carried out upon your death.

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Meet Our Financial Experts

Claudia Buck

Claudia Buck is The Sacramento Bee's personal finance columnist. Read all her columns here. Contact her at cbuck@sacbee.com

Terri Carpenter

Terri Carpenter offers advice on job hunting, retraining and career counseling. Carpenter works at Sacramento Works Inc., the career and job training arm of the Sacramento Employment and Training Agency (SETA). With 15 years in the field, she has hands-on experience with everyone from first-time job seekers to career professionals seeking advice after a layoff or looking for a mid-career change. Ask her a question.

Carlena Tapella

Carlena Tapella is a partner in the law firm of Webb & Tapella Law Corp. in Sacramento. The firm specializes in estate planning and probate, such as estates, trusts, conservatorships and litigation. She is a past president of the Sacramento County Bar Association's Estate Planning & Probate Section. Ask her a question.

Kimberly Foss

Kimberly Foss, certified financial planner, is the founder of Empyrion Wealth Management in Roseville. With nearly 30 years in the financial industry, her clients include women in transition, small business owners, retirees and "pre-retirees." Ask her a question.

Jesse Weller

Gregory Burke, a CPA and tax expert with John Waddell & Co. in Sacramento since 1984, worked as an IRS tax auditor for six years. He’s a past chairman of the California Society of CPAs. Ask him a question.

Daniel Tahara

Daniel Tahara takes your questions about California taxes. Tahara, a spokesman for the state Franchise Tax Board, has 10 years of experience as a tax auditor. Ask him a question.



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