In California title to real property can be held by individuals, by groups of individuals, by corporations, limited liability companies, partnerships and trusts. The best form of title for one person may not be the best form of title for someone else. It all depends on your circumstances and your objectives. Taxes often play a big part in making the decision about the form of title -- in fact, taxes can often dictate how title will be held. For that reason, you should consult your tax professional before making a final decision.

Estate planning can also eliminate some forms of title from consideration. Once you read the following, you may have questions. Please feel free to call us about those questions.

Joint Tenants:

Many married couples own their homes as joint tenants. If you hold title as a joint tenant, you own an undivided part of the whole title. If one joint tenant dies, the other joint tenants will automatically own the whole of the title. No probate will be required for this to take place and no deed must be recorded to make this occur. For married couples this is usually the desired result, but for unrelated real property owners, it may not be what they intend.

Unrelated owners may want to give their interest in the property to their heirs. If that is the result you desire, then joint tenancy is not for you. However, any joint tenant can sever the joint tenancy without the consent of the other joint tenants.

Tenants in Common:

Many unrelated individuals want to be able to leave their interest in real property to their heirs. One of the most common ways of achieving this result is to hold title as a tenant in common. Tenants in common may hold unequal fractional shares of the title to real property. That interest can be transferred at will, by deed or by will, subject to court confirmation. There is no automatic transfer of ownership on the death of a tenant in common. This may be a drawback that prevents many from holding title as a tenant in common.

Community Property:

Only married couples may use this form of title. When title is held this way, each spouse owns one-half of the title to the property. Each spouse may dispose of his or her interest by will, but once again, a court proceeding is required to confirm a transfer on the death of one spouse. There are some tax advantages to holding title as community property, but you will want to consult your tax professional about those issues.

Holding Title Through a Trust:

If you wish to avoid most court proceedings, hold title through a living trust. Property held by a trust is not subject to probate. Married couples can gain the tax benefits of holding title as community property and avoid probate as well. However, creating and maintaining a trust is more expensive than holding title in other forms. The rights of creditors are also defined in the trust agreement.

Holding Title in a Corporation, Limited Liability Company or Partnership:

If you are concerned about your personal liability to creditors, you may wish to consider holding title through one of these entities. However, creating and maintaining these entities can be costly and the tax consequences of holding title through these entities can vary widely. You must consult your tax professional before electing to transfer property to one of these entities.

Disclaimer: The foregoing is not intended as legal advice. The facts and circumstances of any case requires the review of an attorney familiar with real estate and/or construction law. Before taking any action, please consult with your counsel.