Your home is often largest asset that families have to pass on to the next generation. How the home is titled does affect the ease and cost of the transferring the property after your death. Probate, transfer taxes, and subsequent income taxes are all effected by how your property is titled. Title also affects getting a mortgage and the ability to sell a property.

The four most common ways to hold real estate are as a sole owner, tenants by the entirety, joint tenants with the right of survivorship, and tenants in common. (1)A sole owner has complete control of the property and can sell or mortgage the property without permission of any other party. Upon death the sole owner’s property will be subject to probate and pass to the persons named in the owner’s will or to heirs defined by Maryland law. (2) Most married couples hold their home as tenants by the entirety. Tenants by the entirety provides immunity from a claim against one of the spouses and provides the right of survivorship. (3) Joint tenants with the right of survivorship passes title to the surviving owner(s) avoiding probate. (4) Tenants in common exists where each party holds their separate interest in the property. Each tenant can pass their share of the property by will or intestate distribution. If your deed names multiple owners without the language of tenants by the entirety, husband and wife, or joint tenants, then the presumption is that each person holds their share as tenants in common.

Income, estate, inheritance, and transfer taxes are all affected by how the property is titled. The general rule is that property owned by a decedent is adjusted to fair market value. A sole owner’s property receives a full adjustment, tenants by the entirety property receives an adjustment for half the value, and the property adjustment for the surviving joint tenant(s) should be adjusted to account for the ownership interest of the deceased tenant. Estate and inheritance taxes are based on the share of the deceased who owned the property. Those taxes are due whether or not the property passes through the probate process. Real estate transfer tax is due on the portion of property being transferred with exceptions for transfers to relatives or as a distribution from an estate.

There are advantages and disadvantages to all of the titling options available. The takeaway is to consider your present situation and future considerations in titling your property. The counsel of an attorney is often beneficial before making changes. An attorney may suggest additional entities or ownership forms beyond the scope of this article, e.g., revocable trusts, irrevocable trusts, limited liability companies, life estate deeds as tools to protect one of your most valuable assets.