Real estate transfers can be complex when it comes to estate planning. It’s very common for parents to pass down a vacation property or a family home. But it’s important to consider exactly how to do this, especially when leaving the home to multiple beneficiaries.
After all, you do not have to leave real estate or other major assets to just one person. Say that you have three adult children. You could leave them all your family home so that the real estate stays in your family, and then they can decide what to do with it moving forward. There are two general ways that this can be done.
Tenancy in common
The first option is known as tenancy in common. All of the beneficiaries will receive a certain share of the property. In the example above, they may all own 33%. If they want to sell or transfer their share to another person, they can do it as they wish. They don’t have to ask the other co-owners for permission or cooperate with them on the process. This gives them some flexibility, although the other beneficiaries may be unhappy if a sibling wants to sell their share outside of the family.
Joint tenancy
The second option is joint tenancy, which is similar as long as the three beneficiaries want to own the home together. The difference is that they do have to work together if one wants to transfer their share. So if one beneficiary just wants to sell their share because they’re more interested in financial assets, they may need to get permission from the other beneficiaries. Often, those beneficiaries may simply ask to buy them out rather than allowing a third party to make the purchase.
These are just a few things to consider when putting real estate in your estate plan. Take the time to carefully consider the necessary legal steps.
