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.
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.