How Should I Take Title to My New Home?
There are a few different ways for you to take title in your new home. If you're borrowing money for the purchase, communicate with your lender and be sure that the way you wish to take title is in accordance with the terms of your loan. The name(s) on the deed which conveys title to you should match the name(s) on your loan documents. Below are the most common methods of taking title in Illinois for individuals.
Sole ownership
The simplest way to hold title to a property is called sole ownership, meaning that you alone hold title to the property. This is most often used by persons who are single, but a married person can also choose sole ownership if his or her spouse is willing to sign a document renouncing any rights to the property, such as their homestead rights.
Joint tenancy with right of survivorship
Joint tenancy with right of survivorship means that two or more people hold title to the property together in equal, indivisible portions. If one person dies, the ownership automatically defers to the remaining owner(s). For example, if three people own a property as joint tenants, they each own a 1/3 interest in the property. If one were to pass away, their 1/3 would be divided among the remaining two, who would each own a 1/2 interest in the property. Unlike tenants in common, joint tenants CANNOT transfer their interest in the property without the consent of the other joint tenants.
Tenancy in common
Tenancy in common allows multiple owners to each own a percentage of a property. Unlike joint tenants, a tenant in common CAN sell his or her percentage share of the property at any time. Owners also can will their share to their heirs, so upon death, the interest would transfer to the estate of the deceased. The property does not revert to the other owners automatically, in that instance, if one of the owners dies.
Tenancy by the entirety
Tenancy by the entirety is reserved for married couples, and is restricted only to their primary residence. It carries the same type of survivorship rights as joint tenancy with right of survivorship. Tenancy by the entirety carries the additional benefit of protecting the property from some creditors. A home held as tenants by the entirety may only be liened by creditors of joint debts of a husband and wife. In other words, only debts incurred by the couple as a singular entity may attach to the property. In the case of non-joint debts of a couple, the property may not be partitioned, sold, or encumbered without the permission of both spouses. Furthermore, as in joint tenancy, neither spouse may convey their interest in the property without the consent of the other.
Living trust
Property can be transferred into a living trust, which can reduce taxes on the estate in the event of the owner’s death. However, there is some cost to setting up and maintaining the trust. Property you already own personally can also be transferred into a trust. If you have questions about establishing a trust, please contact me.
