Q: What happens when you own property with someone and the co-owner dies?
A: The answer depends on how the property is titled. For Kansas residents, here’s the short and sweet version of how property will transfer if a co-owner dies:
Tenancy in Common:
If the owners are “tenants in common”, the deceased owner’s interest will transfer according to his/her estate plan, or intestacy laws should he/she fail to make a plan. The surviving owner(s) will not obtain the decedent’s interest unless they receive it under his/her estate. The surviving owner will continue to own the same percentage of property, but they may end up sharing the property ownership with a new co-owner(s) after the decedent’s estate is settled.
If the property is owned as “joint tenants with rights of survivorship and not as tenants in common” and one of the owners dies, the deceased person's interest transfers to the surviving joint tenant. For the surviving owner to obtain clear title, her/she must file an original death certificate of the decedent with the Register
If you own income-producing property, one of the ever-present concerns you face is the possibility of being sued by a tenant. If you own the income-producing property individually (not in and LLC or corporation), personal assets, such as your home and other investments could be subject to the Court judgment, should you be found guilty in the lawsuit. Additionally, have you considered what will happen when you die? Will your family fight over your home, vacation home, or investments properties?
If you haven’t taken the necessary steps to protect your assets from lawsuits or probate, you or your heirs could face a nightmare of legal fees and court dates. Two commonly used tools to protect real estate assets include limited liability companies (LLC) and trusts:
LLC: In a nutshell, an LLC protects your personal assets from lawsuits or claims that results from your ownership of assets in the LLC (in this case, real estate). You must comply with Kansas LLC laws in order to receive those protections, but with the assistance of an experienced attorney, this is easily accomplished. Your attorney should prepare the LLC formation documents, file your LLC with the State and advise you on your compliance duties with the State. Formation documents should at least include: Limited Liability Articles of Organization and an Operating Agreement detailing who the members are and what their
Q: If I add my child’s name to the title of my house, wouldn’t that be the easiest way to keep my house out of probate and transfer it quickly to my child after my death?
A: The answer to your question is a solid “maybe”. Your personal circumstances will dictate whether this estate planning strategy is the best move for you.
Adding your child’s name to your deed could speed the transfer of that asset to your beneficiaries, and keep it out of probate. But, before you run off and put your child’s name on the title of your house you should consider the risks.
1. By adding your child to the title of your home, you have made a gift that is subject to gift taxes. The gift is likely far below the current federal gift tax exclusion amount, so you shouldn’t have to pay gift taxes. However, you may need to file a gift tax return if the gift is over the annual exclusion amount.
2. If you need KanCare (Medicaid) assistance to pay for nursing home care within 5 years of adding your child’s name to the deed, you could be penalized when requesting benefits.
3. If your child dies before you, his/her interest in your home becomes part of his/her estate. This interest in your home will be subject to his/her liabilities and would pass to his/her beneficiaries as named in your child’s own estate plan. Someone you don’t trust could become the new co-owner of your home.
4. If you decide to sell the house and move, your child could legally refuse to transfer ownership back to
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