My spouse and I bought an apartment together before we were married. The deed states that we own it as “joint tenants with rights of survivorship.” Is our apartment protected from creditors? What happens to our ownership interests if one of us dies or we get divorced?
There are three general methods to categorize ownership in real property in New York State: tenancy in common, joint tenancy with rights of survivorship, and tenancy by the entirety. A provision in the statutory law makes ownership of shares in a cooperative apartment equivalent to real property interests.
Tenancy in common
A tenancy in common means that each person has a share of interest in the property. It can be in 50-50 shares or any other allocation.
Joint tenancy with rights of survivorship
In a joint tenancy with rights of survivorship, a joint owner’s interest can be sold or encumbered during his or her lifetime with the consent of the other joint tenants, however, his or her share cannot be devised in a will before or after death. Instead, it passes to the surviving joint tenants — hence the “right of survivorship.”
Put another way, the last man standing takes full ownership to the property.
Tenancy by the entirety
A tenancy-by-the-entirety is a heightened form of tenancy available to married spouses who take title to the property. Since the passage of the Marriage Equality Act in New York State in 2011, this is available to all spouses, whether opposite-sex or same-sex. It affords not only survivorship rights, but also certain creditor protection rights.
A tenancy-by-the-entirety affords greater creditor protection to the surviving tenant. It is only available to those who are married at the time they take title. If you take title before you are married, as joint tenancy with rights of survivorship, and later marry, the tenancy-by-the-entirety does not automatically spring into effect or convert the joint tenancy with rights of survivorship to tenancy-by-the-entirety.
Rather, you would need to execute a new deed reflecting the change in ownership status. Even if you closed on the apartment the day before your wedding and the deed says “as husband and wife,” if you were not legally married when you received title, the title would likely be deemed by a court of law as joint tenancy with rights of survivorship. In more recent years, attorneys more frequently use the phrase “as spouses” to appropriately reflect the legal changes to the definition and scope of marriage.
These rules only apply to transactions that occurred after 1975. If the real property at issue was purchased before 1975, and the deed states that the parties were married when in fact the parties were not married or the validity of the marriage is later challenged, the ownership will be deemed a tenancy in common, which does not provide for survivorship interest.
If the property at issue is a cooperative apartment, the rules described above only apply since 1996. Prior to 1996, shares in cooperative apartments were not deemed to be the equivalent of real property and could not be held as tenants-by-entirety.
As noted above, tenants-by-the-entirety are afforded extra creditor protection on their home that is not available to joint tenancy with rights of survivorship tenants. For example, if your husband has judgment creditors, that creditor cannot satisfy the judgment against the apartment while you continue to own it with your husband as a tenant-by-the-entirety. If you hold the property as joint tenants, the creditor may enforce the judgment against your husband’s interest in the apartment. Although it is limited to your husband’s indivisible one-half interest in that case, it could force a sale of the apartment.
There are many more elements to consider when assessing ownership of property, and every situation is different. It is always a good idea to review titling to your assets upon the occurrence of any life change — whether marriage, death, divorce, or the birth of a child or grandchild, and to update your documents to ensure they continue to meet your goals and objectives. You should always consult with your attorney before undertaking any changes.
What is the procedure for selling my house after my death?
The answer depends on how title to your house is held. For example, if you are married, and if the house is owned by you and your spouse (and your spouse is still alive), then you most likely hold title as tenants by the entirety. If this is the case, then, upon the death of the first spouse, the surviving spouse automatically takes sole title to the house as the surviving tenant by the entirety. In that scenario, since your spouse would be the sole owner after your death, he or she would have the option of selling the house upon your death or to continue living there.
If, however, you hold title to the house individually or jointly with another person without rights of survivorship, then your will (assuming that you have one) would control your interest in the house after your death. Your will can either leave the house to a specific individual or individuals or it can direct that the house be sold upon your death. In either instance, the transfer of title cannot occur until your executor has the legal authority to act on behalf of your estate. The legal authority is conferred upon your executor through the probate of the will.
Thus, any sale or transfer of the house cannot take place until the will has been submitted to the proper Surrogate’s Court for probate. A probate proceeding is the process by which the will is recognized as valid by the court and the executor nominated in the will is actually appointed by the court to the role. Once the executor is appointed, he or she can then sign a real estate broker’s agreement, and a contract of sale and deed on behalf of the estate.
If you die without a will, then title to the house will pass to your distributees pursuant to rules of statutory descent, commonly referred to as the laws of intestacy. In the case of intestate succession, before the house could be sold, any title insurer will require an “heirship” investigation to establish the proper distributees.
A complete review of these issues now may save your beneficiaries considerable expense and grief after your death.
— By Nancy Burner and Eric D. Cherches, Burner, Cherches & Smith, Llp
Alison Arden Besunder is the founding attorney of the law firm of Arden Besunder P.C., where she assists new and not-so-new parents with their estate planning needs. Her firm assists clients in Manhattan, Brooklyn, Queens, Nassau, and Suffolk Counties. You can find Alison Besunder on Twitter @estatetrustplan and on her website at www.besun