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Community Property or Joint Tenacy?

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Joe74

Junior Member
What is the name of your state? California


Hello,

I am not sure if this is the proper place to post this question. But my wife and I are in the process of purchasing a home. We are at the point were we need to decide if we are in a joint tenancy or community property as far as the title is concerned. I do know what the 2 mean. My question is what is best? The title company also offers another title which is both joint tenancy and comm. property. Please help with more info. on which will work better.

Thank you in advance,
Joe
 


divgradcurl

Senior Member
Joe74 said:
What is the name of your state? California


Hello,

I am not sure if this is the proper place to post this question. But my wife and I are in the process of purchasing a home. We are at the point were we need to decide if we are in a joint tenancy or community property as far as the title is concerned. I do know what the 2 mean. My question is what is best? The title company also offers another title which is both joint tenancy and comm. property. Please help with more info. on which will work better.

Thank you in advance,
Joe
Joint Tenanacy, or joint tenancy with rights of survivorship, is a way of holding title to the property such that when one of the joint tenants dies, the other joint tenant(s) automatically get the deceased's share of the property, without having to deal with probate or wills or anything. Even if a joint tenant tries to give away their portion in a will, they can't -- because the joint tenancy trasnfers ownership outside of probate, their is nothing to give away in a will. The problem with joint tenancy is that the person who gets the deceased's portion of the property does not receive a "step-up" in basis for tax purposes.

Community property is for married couples only, and only in the 9 states (CA is one) that recognize community property. The property is held by both members of the community, and neither can sell or give away their interest in the property without the permission of the other. How community property is dealt with upon the death of one of the spouses can be complicated. Upon the death of one spouse, the surviving spouse will retain their 1/2 interest in the property, but will also get 1/2 of the deceased spouse's share automatically. However, the last 1/4 interest could be willed away to someone else; if there is no will and the couple has children, the children could be entitled to all or part of that last 1/4, and further, the deceased spouse could have provided for the surviving spouse in a will that gives the spouse other property in exchange for giving up their interest in the deceased 1/2 interest, forcing the surviving spouse to decide between an "elective share" or what's in the will.

Can be complicated. But you do get a step-up in basis for tax purposes.

However, there really isn't any reason to decide -- in California, now we have "community property with rights of survivorship." This gives married couples the best of both worlds -- the automatic transfer of ownership outside of probate, combined with the "step-up" in basis for tax purposes.

Unless you have some specific ideas as to why you might want to hold title otherwise, community property with rights of survivorship is almost certainly the most efficient way to hold title with a spouse in California. However, you might want to talk with an attorney in your area, who can review all of your specific facts, and advise you accordingly.
 

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