With a shared passion for the outdoors and a love for hunting, brothers John and Joe pool their resources to purchase a plot of hunting land in the vast expanse of central South Dakota.
The memories they envisioned creating on their new property quickly come to fruition as John and Joe spend weekend after weekend improving the land and hunting with their friends and family.
However, their excitement caused the brothers to overlook an important aspect of their partnership: the legal implications of their joint ownership.
Understanding different types of joint ownership and estate planning tools can help John and Joe safeguard their investment and ensure a smooth transition of ownership after their respective deaths.
Estate planning for joint ownership of assets
Real estate is not the only jointly owned property to consider in your estate planning. Other types of assets you may own jointly include vehicles, securities, and bank accounts.
There are two common types of joint ownership in South Dakota, each with their own implications for ownership if one party were to pass away.
1. Tenants in Common
As tenants in common, John and Joe would each own a distinct share of the property. Each owner is free to transfer or sell their share without the consent of the other owner.
Upon the death of one Tenant in Common, the deceased’s share of the property passes to their heirs through their will, or according to the laws of intestate succession if there is no will.
In addition, individuals can establish a living trust or execute a transfer-on-death deed (TOD) with respect to their ownership interest.
By transferring ownership of the property to the living trust or via a TOD, the property passes directly to the designated beneficiaries upon the owner’s death, bypassing the probate process.
2. Joint Tenancy With Rights of Survivorship
Joint tenancy with rights of survivorship is a form of joint ownership where each owner has an undivided interest in the property.
When one owner dies, their share automatically passes to the surviving owner without going through the probate process. Therefore, the deceased owner’s will does not control the distribution of the property.
Next steps and resources
Whether tenants in common or joint tenancy with rights of survivorship is best for your situation may depend on simplicity, flexibility, control, and the relationship between co-owners.
To determine the appropriate estate planning tools to protect your jointly owned assets and minimize the burden of probate, it’s essential to consult an experienced estate planning attorney.
Once you’ve solidified your estate plan with the help of a trusted attorney, reach out to our team at First National Wealth Management for assistance with putting your plan into action. We’re dedicated to helping you achieve peace of mind and preserve your legacy.
Disclaimer: This article is intended solely for educational purposes and is based upon South Dakota property, probate, and trust law. Each circumstance is unique, and any of the techniques discussed herein may not be appropriate for you or your situation. Prior to implementing any of these planning techniques, you should consult your professional legal, tax, and financial advisors.
