A major component of estate planning is directing the distribution of property. The type of ownership — sole or joint — of each asset impacts how it's passed on to beneficiaries. Here's a closer look at how each option works.
Sole ownership refers to when the property belongs to a single individual. In such cases, the owner hasn't chosen another person to receive possession through a transfer or payable-on-death designation, or such an option isn't available. Possible examples include a home with only one person on the deed, an individual banking account, and a mutual fund.
When a person passes away, the solely owned property must go through the probate process. However, there's an exemption for non-real estate assets valued at less than $20,000. In such cases, an affidavit for collection filing can skip the process. Otherwise, the probate court distributes the property based on the elements outlined in the will or by intestate laws if the final wishes weren't documented.
Joint ownership of property covers various arrangements. The simplest is if multiple people hold an asset in which the transfer occurs automatically, so it doesn't need to be included in estate planning. For instance, if a married couple lists both names on the deed of their home, the surviving spouse becomes the sole owner upon the other's death. When joint ownership involves nonspouses, a deceased person's percentage of the possession is split between the remaining individuals.
Such property types also refer to nondirect ownership in which a beneficiary is outlined by choosing a payable or transferable-on-death designation. Banking and investment accounts, housing deeds, and automobile titles usually have such options when signing up or purchasing. As a result, the person chosen becomes the new owner upon the original's passing without the need for probate.
Other types of joint ownership include life insurance. As with a bank account, the owner can choose a payable person. Trusts also bypass the probate process because the possession is transferred to the entity of the arrangement.
For more information about the differences between sole and joint ownership, reach out to Cecil, Cecil & Barker, PA, in High Point, NC. Their trusted attorneys offer guidance and representation in matters of estate planning, including will and trust creation. Learn more about their practice areas online, and request a consultation today for personalized assistance at (336) 883-8383.