© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Chapter 2 Property

Wills, Trusts, and Estates Administration, 3e Herskowitz 2 © 2011, 2007, 2001 Pearson Higher Education, Upper Saddle River, NJ All Rights Reserved. Learning Objectives Understand the distinctions between real property and personal property Distinguish the various tenancy classifications Understand how community property jurisdictions alter tenancy by the entireties Distinguish the various estates in property Understand the distinctions between probate assets and non-probate assets Understand the benefits of avoiding probate

Wills, Trusts, and Estates Administration, 3e Herskowitz 3 © 2011, 2007, 2001 Pearson Higher Education, Upper Saddle River, NJ All Rights Reserved. Property Property is anything which can be owned Property is classified as either real property or personal property

Wills, Trusts, and Estates Administration, 3e Herskowitz 4 © 2011, 2007, 2001 Pearson Higher Education, Upper Saddle River, NJ All Rights Reserved. Real Property: What Is It? Land Airspace Buildings and other structures Fixtures

Wills, Trusts, and Estates Administration, 3e Herskowitz 5 © 2011, 2007, 2001 Pearson Higher Education, Upper Saddle River, NJ All Rights Reserved. Fixtures Things or objects permanently affixed to land or onto buildings or structures Are the following fixtures? 1. Laminate flooring? 2. Surround speakers wired into the walls? 3. Basketball hoop on garage roof? 4. Grandfather clock? 5. In-laws?

Wills, Trusts, and Estates Administration, 3e Herskowitz 6 © 2011, 2007, 2001 Pearson Higher Education, Upper Saddle River, NJ All Rights Reserved. Personal Property: Tangible vs. Intangible Tangible Personal property which can be touched or sensed Examples: wrist watch car livestock Intangible Personal property which is represented by a symbol (which can be touched) Examples: stock shares (stock certificates) copyright (textbook) checking account (checkbook)

Wills, Trusts, and Estates Administration, 3e Herskowitz 7 © 2011, 2007, 2001 Pearson Higher Education, Upper Saddle River, NJ All Rights Reserved. Forms of Property Ownership One owner owns “severally” Multiple owners own “jointly” Common forms of joint ownership joint tenancy tenancy in common tenancy by the entirety community property

Wills, Trusts, and Estates Administration, 3e Herskowitz 8 © 2011, 2007, 2001 Pearson Higher Education, Upper Saddle River, NJ All Rights Reserved. Joint Tenancy When two or more own property together with “rights of survivorship” All joint tenants must take title to the property at the same time (unity of title) Surviving tenants take the property interest of the other tenant at his or her death This type of ownership is outside the will of all but the last surviving joint tenant If a joint tenant transfers his or her interest to a non-joint tenant, the new co-owner isn’t a joint tenant with the others

Wills, Trusts, and Estates Administration, 3e Herskowitz 9 © 2011, 2007, 2001 Pearson Higher Education, Upper Saddle River, NJ All Rights Reserved. Tenancy In Common A form of joint ownership without any survival rights Each tenant can pass his or her share to others at death Example: siblings might inherit the family home to co-own, so that each sibling could pass his or her interest to respective heirs

Wills, Trusts, and Estates Administration, 3e Herskowitz 10 © 2011, 2007, 2001 Pearson Higher Education, Upper Saddle River, NJ All Rights Reserved. Tenancy By The Entirety Joint ownership exclusive to wives and husbands Unlike joint tenancy with rights of survival, one spouse may not transfer his or her interest unilaterally Has been abolished in some jurisdictions

Wills, Trusts, and Estates Administration, 3e Herskowitz 11 © 2011, 2007, 2001 Pearson Higher Education, Upper Saddle River, NJ All Rights Reserved. Community Property Also exclusive to husbands and wives Each spouse owns ½ of all property acquired by either spouse during their marriage… except for “separate property” Separate property is determined by state law, and includes property each spouse received before marriage Nine states and Puerto Rico are community property jurisdictions

Wills, Trusts, and Estates Administration, 3e Herskowitz 12 © 2011, 2007, 2001 Pearson Higher Education, Upper Saddle River, NJ All Rights Reserved. The Fee Simple Estate Also known as “fee simple absolute,” or “estate in fee” Broadest estate, having no restrictions, other than government’s eminent domain More than one person may own a fee simple Is fully transferable in life or death

Wills, Trusts, and Estates Administration, 3e Herskowitz 13 © 2011, 2007, 2001 Pearson Higher Education, Upper Saddle River, NJ All Rights Reserved. The Life Estate The right of a person (the life tenant) to use property until the death of that tenant, or the death of someone else At the death of the tenant, the life estate terminates and the property “reverts” to the grantor …Or, the estate could be transferred to another, called the “remainderman” During the life estate, the life tenant can transfer his or her interest—and no more

Wills, Trusts, and Estates Administration, 3e Herskowitz 14 © 2011, 2007, 2001 Pearson Higher Education, Upper Saddle River, NJ All Rights Reserved. Tenancy for Years Unlike a life estate, the term for the tenant is determined Its conclusion is known at the beginning Unlike a lease, this tenant has ownership rights At least for the balance of the designated term

Wills, Trusts, and Estates Administration, 3e Herskowitz 15 © 2011, 2007, 2001 Pearson Higher Education, Upper Saddle River, NJ All Rights Reserved. Probate vs. Non-Probate Assets Probate Assets Property in an estate that must transfer through a probate court upon the owner’s death Examples Personal property not held by a trust Real estate not held by a trust, or owned by a joint tenant with survival rights Non-Probate Assets Property outside the probate court’s authority, because it is not part of the probate estate Examples Life insurance Pay-on-Death accounts Living trusts Joint tenancy with survival rights