The groundwork you lay for your estate planning covers the primary concerns of any estate plan. This includes identifying what property you own and those to whom you wish to leave your property. You can’t leave property that you don’t own. This article will take a look at ownership rules for those who are single, unmarried couples and married couples.
Singles
If you are single, ownership rules tend to be simple. Except as dictated by a contract, such as an operating agreement for a limited liability company, partnership agreement, or other form of shared ownership, you can leave property you own outright.
Unmarried Couples
Each person in an unmarried couple owns his or her own property unless they agree to share ownership of particular property. Often, an agreement to own property together must be in writing to be enforceable. Some states recognize an oral agreement if it can be proven, which is difficult. As they say, an oral agreement is about as good as the paper it’s written on. It’s always best for unmarried couples to put property sharing agreements in writing.
If each person in an unmarried couple kept their property separate, each party is free to give their property to whomever they choose. Please note, it’s a good idea to list each person’s separate property in a written agreement as well.
If the ownership interest is shared, either as a tenancy in common, with a written contract, or partnership, you are only able to dispose of your share only, unless the partnership agreement or contract states otherwise. If property is held by a joint tenancy, it automatically goes to the survivor.
Married Couples
For property acquired during marriage, there may be ownership rules that place restrictions on your right to leave property. It depends on the state in which you reside. Nine states are “community property” states where the spouses equally own most of the property obtained during marriage. The other states follow the “common law” system. Within the common law system, generally, the property owner is the individual whose name appears on the document.
In common law states, typically there are laws that limit the ability of one spouse to disinherit the other. Therefore, regardless of what the deceased spouse intended, the surviving spouse has a legal right to receive a specified portion of the deceased spouse’s property. If one spouse plans on leaving the other spouse more than half of his/her property, these laws shouldn’t affect them.
Now that you understand what your property consists of, our next article will take a closer look at your assets, liabilities, and net worth. This will provide a clearer picture of what property is in your estate.
If you are a resident of Colorado or Florida, feel free to reach out to me. Both Colorado and Florida are common law states.
(c) 2021 Karen Van Den Heuvel Fischer
