Budgeting Financial Planning Estate Planning Understanding Ownership of Property What happens to a house when the owner dies? By Julie Garber Julie Garber Julie Garber is an estate planning and taxes expert with over 25 years of experience as a lawyer and trust officer. She is a vice president at BMO Harris Wealth management and a CFP. Julie has been quoted in The New York Times, the New York Post, Consumer Reports, Insurance News Net Magazine, and many other publications. learn about our editorial policies Updated on March 10, 2022 Reviewed by Margaret James Reviewed by Margaret James Twitter Peggy James is an expert in accounting, corporate finance, and personal finance. She is a certified public accountant who owns her own accounting firm, where she serves small businesses, nonprofits, solopreneurs, freelancers, and individuals. learn about our financial review board Share Tweet Pin Email In This Article View All In This Article Property Ownership Impacts Estate Planning Sole Ownership Joint Ownership With Right of Survivorship Tenants in Common Title by Contract Where Property Goes After the Owner's Death Frequently Asked Questions (FAQs) What happens to a property when the owner dies? If tenants-in-common split up, can they remain owners of a property? Photo: The Balance / Nusha Ashjaee What happens to your property when you die depends on various components of your estate plan. Estate planning can be a complicated process with numerous factors to be considered and decisions to be made. All of those factors boil down to one common denominator: how your property is titled. Understanding who owns what is the key to creating a good estate plan. Even the most sophisticated and well-thought-out plan will fail if you don't understand how your property is titled. It might pass directly to beneficiaries by operation of law, or it might require probate. Note You might not have a right to bequeath an asset at all in some cases, such as if you hold title to a property jointly with right of survivorship. How Property Ownership Impacts Estate Planning Property is titled according to one of three basic concepts: sole ownership, joint ownership, or title by contract. Assets can only be titled in one of these three ways, but each can include one or more variances. Sole Ownership Sole ownership means that a property is owned by one person in their individual name and without any transfer-on-death designation. Examples include bank accounts and investment accounts held in one individual's name without a "payable on death," a "transfer on death," or an "in trust for" designation. A property is titled in one individual's name in "fee simple absolute" in real estate. The individual owns 100% in their sole name, with title being transferred to someone else at the time of the owner's death. Joint Ownership With Right of Survivorship Joint ownership can come with right of survivorship or without it. Joint ownership with right of survivorship means that two or more individuals own the account or real estate together in equal shares. The surviving owner or owners continue to own the property after one owner dies. They automatically inherit the deceased's share by operation of law. For example, John and Mary would each own half of a property if they were joint tenants with Joe, and if Joe were to predecease them. John, Mary, and Joe would each have owned 33.3% before Joe's death. John and Mary would each inherit 16.65% ownership from Joe, so then they would own 50% each. Note No joint owner can bequeath their share of the property to anyone else. The co-owners have a legal right to it when a joint owner dies. No owner can sell the property or encumber it with liens or mortgages without the consent of the other(s), although they can sell or encumber it jointly. Tenancy by the Entirety “Tenancy by the entirety" is a special type of joint ownership with right of survivorship between married couples. It's recognized in most states that don't observe community property law, but not all. Each spouse has an undivided interest. Neither spouse can transfer, encumber, or bequeath the property without the other's consent. Community Property "Community property" is another special type of joint ownership reserved for married couples in nine states: Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, and Wisconsin. This type of ownership does not necessarily come with right of survivorship. Spouses can leave their 50% ownership to anyone they want when they die if they bequeath it in their estate plan, but the property will go to the surviving spouse if they fail to do so. Note The last surviving owner is free to do whatever they want with the property in community property states, assuming the decedent hasn't bequeathed their share to someone else. Tenants in Common Joint ownership without right of survivorship is typically referred to as owning the property as "tenants in common." Two or more individuals own a specific percentage of the account or real estate, but not necessarily equal shares. One individual might own 80%, while a second individual owns 20%. Joint co-owners can pass their shares to beneficiaries under the terms of their wills or other estate plans in this type of deed. Probate would be necessary to transfer the asset. Title by Contract "Title by contract" refers to assets that bear a beneficiary designation that names an individual or individuals to receive them after the owner dies. This type of title includes bank accounts or investment accounts that have a "payable on death," "transfer on death," or "in trust for" beneficiary designation. Title by contract also includes life insurance policies that have designated beneficiaries, as well as retirement accounts such as IRAs, 401(k)s, and annuities. Life estate deeds designate a "remainderman" to inherit real estate in this way, and transfer-on-death or beneficiary deeds also have designated beneficiaries for real estate. Where Property Goes After the Owner's Death Property is either a probate asset or a non-probate asset, depending on how it is held. Non-Probate Assets Non-probate assets don't have to go through the court-supervised probate process after the owner dies, because there's already a means in place to move the asset from the ownership of the deceased to living individuals. Other owners or beneficiaries take control of the deceased owner's assets by operation of law simply because they survive the deceased owner. Non-probate assets include assets owned jointly with right of survivorship, including tenancy-by-the-entirety property and some community property. They include any type of asset that bears a beneficiary designation to transfer it after the owner dies. When Assets Go Through Probate As the name suggests, probate assets must go through a court-supervised probate process after the owner dies, because probate is the only way to get the asset out of the deceased owner's name and into the names of the beneficiaries. Probate assets include sole-ownership property, tenants-in-common property, or any other asset owned jointly without right of survivorship. Who inherits probate assets depends on whether the owner has left a last will and testament. The terms of the last will and testament should dictate beneficiaries if the owner left one. Otherwise, the intestacy laws of the state where the owner lived at the time of death will determine who inherits the owner's assets, as will the intestacy laws of any other state where the owner owned real estate. Laws for intestate succession typically begin with the surviving spouse, then consider direct descendants if any. More distant relatives rarely inherit unless the deceased's spouse or children are no longer living, or if the deceased never married or had children. Putting It All Together You'll be left with an estate plan that will confuse your loved ones and possibly have them haggling in court if you don't take all of these rules into consideration.Go over each one of your assets, and take note of who owns what and who the designated beneficiary is, if applicable.Speak with an attorney if you have any questions. Frequently Asked Questions (FAQs) What happens to a property when the owner dies? In the case of a jointly owned property, death of one owner typically means it passes on to the other owner and avoids probate. In other cases, the property goes to whomever it was bequeathed to in a will, or it becomes part of the estate. If tenants-in-common split up, can they remain owners of a property? Specify in a legal document what the division of ownership is before investing in a property with someone who is a friend or non-spouse, particularly if the two parties are not putting the same amount of money into the property. If you own as tenants-in-common, one always has the right to pass their share on to someone else. You could also continue to own the property even if you do not live together in it. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Cornell Law School Legal Information Institute. "Fee Simple." Cornell Law School Legal Information Institute. "Right of Survivorship." American Bar Association. "Home Ownership and Unmarried Couples." Cornell Law School Legal Information Institute. "Tenancy by the Entirety." IRS. "Publication 555, Community Property." Cornell Law School Legal Information Institute. "Tenancy in Common." Northern California Center for Estate Planning and Elder Law."Understanding How Property Ownership Affects Your Estate Plan (part 2 of 2)." Civil Law Self-Help Center. "Intro to Probate." Cornell Law School Legal Information Institute. "Intestacy."