Alice and Bill live in Brooklyn. They are about to purchase their first home. Understanding how expensive the Brooklyn real estate market is, Alice’s mother, Cathy, is going to contribute some money towards the purchase of the property. But how can this deed be titled to both preserve the mother’s rights and avoid Probate.
There are a number of ways to hold property and not go through probate:
- The first way to hold property is as “tenants in common.” Tenants in Common are considered to own their share of the property and be responsible for all costs of their pro rata share. When a tenant in common dies, that person’s share passes via that person’s estate. If a person has a Last Will and Testament, then the property will pass pursuant to that Will. If the property was transferred into a Trust, then the asset will pass pursuant to the terms of the Trust. If a person dies without a Will then the property will pass in accordance with the laws of intestacy (or, in New York, pursuant to Estates Powers and Trusts Law Section 4-1.1). The estate of a person who holds property as a tenant in common will then have to determine what needs to be done, including whether they need Court approval to sell. A tenancy in common may be the optimal way for two parties who have different remainder beneficiaries to hold property. However, this way of holding property may not be ideal for those parties desiring to pass their property to the same person, or, those trying to avoid probate (click here to learn more.)
- Another way to hold property is as Joint Tenants. Joint tenants each own the full share of the property. Upon the death of one tenant, the second tenant automatically succeeds to the deceased tenant’s ownership interest in the property. There is no need to probate.
What about Cathy? Can Cathy’s contribution to the property be reflected in the deed? Perhaps Cathy should be given a “life estate.” A life estate is only available during a person’s lifetime. During life, the other parties cannot sell or do anything to the property without the consent of the life estate holder. A great option if Cathy does not want Alice to cash out and move out to another state. At death, the life estate holder’s interest is extinguished, again avoiding the need for probate.
What’s the best option for Alice, Bill, and Cathy? Under these circumstances, a joint tenancy deed with a life estate for Cathy.
Additional resources provided by the author
For more information, please contact estate planning attorney Regina Kiperman:
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Grimaldi & Yeung LLP
80 Maiden Lane
New York, NY 10038
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