Wisconsin law defines a number of ways an individual can own and distribute real estate. Each method offers its own unique set of advantages, and may be more or less valuable to you depending on your circumstances. Having a basic understanding of these may offer real value to you in deciding whether to keep or change the current ownership structure of your property.
Some ways are: fee simple, joint tenants with rights of survivorship, joint marital property, tenants in common, life estate, mineral rights, easement, in trust, for a term of years, ground lease, and they go on.
One well-known method is joint tenancy with right of survivorship. Under this arrangement, each co-owner possesses an equal share of the property and, upon the death of either co-owner, the other takes full ownership of the property automatically. On the “plus side,” this arrangement is simple, low maintenance and, in most situations, effective for avoiding probate (on that property). This arrangement also has downsides, in that the property may be at risk of litigation by the creditors of either co-owner and a risk exists with regard to accidental disinheritance of some family members, particularly children of a previous marriage.
Many people own real estate as “tenants in common.” This means that they all share in ownership of the property like joint tenants, but if one of them dies, their share does not go to the other owner(s). The dead person’s share is transferred according to that person’s estate plan (will or intestate succession).
Another method available is the transfer-on-death deed. A transfer-on-death deed allows you to name a beneficiary who takes ownership of the property upon your death, but has no present ownership interest in the property. This means that you retain full control of the property during your lifetime, and you can change (or even revoke) the beneficiary designation as often as you want as long as you are alive and competent. This method also generally avoids probate. Similar to the joint tenancy with right of survivorship, transfer-on-death deeds can sometimes lead to unintentional disinheritances, especially if you change your will or trust but overlook making a companion change to your transfer-on-death deed. Additionally, the beneficiary has no legal authority until you die. So, if you become mentally incapacitated, and you have no durable power of attorney for finances, you will need a guardianship established so that someone may continue to manage your property for you.
An additional option is ownership by a trust. As an example, you may fund (or transfer legal ownership of) your real estate into a revocable living trust. As long as you remain as the trustee of your trust, you continue to hold complete control over your property. As another benefit, should you become incapacitated, your successor trustee (whom you designated when you created your trust) automatically takes over to manage all of your assets, including your real estate. As a disadvantage, you do have create a deed transferring the property and, if the property is financed, you will need to contact and coordinate with your lender with regard to completing the transfer to your trust.
One of the largest assets each of us holds, and one of the centerpieces of any estate plan, is our real estate. To get quality, customized advice regarding how to handle estate planning for your real estate, reach out to estate planning attorney Daniel J. Krause of Krause Law Offices LLC. He is well-versed in all types of real estate ownership vehicles and can help you select the best option for your situation. Consult Attorney Daniel J. Krause today.
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