Are you getting a divorce but worried about your share of the property? However, the legal system allows many ways for two or more people to own a property.
The two most popular ways are joint tenancy and community property ownership. But what are joint tenancy and community property? What’s the difference between them and their benefits after divorce.
This article describes everything along with a discussion on joint tenancy vs. community in divorce. Let’s get started!
What is Joint Tenancy?
Most married couples choose joint tenancy ownership in property deeds. In this type of ownership, you can inherit property or shares of your partner or co-owner. You can also bypass probate when the other partner deceases based on the right of survivorship.
However, as both partners have an equal share, their opinion matters while selling the property. In divorce cases, both have to give a proper verdict to come to sell a property.
Additionally, you can ensure your spouse gets the properties without any probate when you pass away.
What is Community Property?
The community is ownership that’s only possible between a married couple. However, this ownership is similar to a joint tenancy with equal rights.
When your partner passes away in community property ownership, you can inherit the other half of the property being the disposition subject.
However, you might not find a disposition – the properties automatically pass to the surviving partner in those cases.
Even in this ownership, you will require bypass probate when a partner decease. However, there is a new type of ownership which is “community property with right of survivorship.”
In such cases, the property will pass automatically even when the deceased partner has no disposition.
What is The Right of Survivorship?
One of the legal terms in real estate is the Right of Survivorship. This legal term brings various types of joint tenancy ownership.
In most cases, two people own a single property. Sometimes, the other directly receives the property when a partner passes away.
Even if the deceased partner creates a will, the surviving partner will receive the whole property. This indicates the right to survivorship.
Additionally, such legal terms help to protect a spouse even when another passes away or gets separated.
Community Property with Right of Survivorship in Divorce
In community property with the right of survivorship, a couple shares the property equally, and if one passes away, the other easily receive the property with probate.
Most people believe that community property is easier to transfer or hold than a joint tenancy.
This system equally divides the properties between your spouse and you, providing a surety for the future.
The surety is that when one spouse passes away, the other will get the whole property to themselves.
Joint Tenancy With Right of Survivorship in Divorce
There are complications in divorces based on a joint tenancy. For example, it is questionable who will get the family home.
The prenuptial agreement can help the couple to get what they deserve when their marriage fails. Therefore, the couple can decide who will get the home when separated.
If you get a house before marriage, you can apply to change the ownership to a joint tenancy of your spouse and you.
While you are trying to sell your property, it is necessary to have each other’s consent in joint tenancy.
Nevertheless, some are exempt from the Matrimonial Property Act when divorced. The properties owned before marriage are exempted. If there are assets in joint tenancy, the other spouse can apply to claim in case of divorce.
Community Property VS Joint Tenancy
Both the ownerships are different from each other in a few categories. In the past, people favoured joint tenancy, but now, everyone prefers community property as the title transfer is easier.
Let’s look into the distinct differences between both the ownership.
Consequences of Income Tax
The tax system doesn’t differ much between joint tenancy and community property, but the death of any spouse could bring some changes.
According to the general law, the property’s market value and tax basis are equal when someone passes away. Therefore, if you sell a deceased person’s property share, you would not face any loss or gain.
In the case of joint tenancy and community property ownership, the couple would individually own the property if there was divorce.
However, if one partner dies, the situation tends to be different. In joint tenancy, the other must pay tax if they immediately sell the property. On the other hand, the surviving spouse doesn’t pay tax on community property.
Dissolution of Marriage
In case of dissolution of marriage, community property owned with joint property doesn’t get affected whether there’s joint tenancy or community property ownership.
If you change your ownership of the separate property to joint tenancy or community property, you can reimburse it again to the old ownership type.
However, most people find the characterization of properties to be very complicated. When you change the ownerships of separate properties, you require legal advice.
Therefore, it would be best to avoid changing the ownership of separate properties because these could create a hassle while you, unfortunately, get a divorce.
Rights of Creditors
Based on the right of creditors, the liabilities tend to differ in joint tenancy and community property ownership.
In community property, both spouses are liable for the debts. On the other hand, in joint tenancy, the non-debtor is not responsible for any debts.
This means that if you are in a joint tenancy and your partner has debts, and you don’t have to pay for it. Your partner is reliable for their debts.
However, the legal system favours the joint tenancy in case of debts when one of the partners passes away.
Final Words
In conclusion, there are very minimal differences between joint tenancy vs. community property in a divorce. However, the legal system tends to favour a couple when a spouse passes away in both types of ownership.
Additionally, many law firms can help you understand the difference between ownerships and suggest the best way for you.
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