Three Ways to Hold Title to Real Estate in Wisconsin

Attorney Thomas B. Burton discusses three ways to hold title to real estate in Wisconsin and explains the main features of each method. In this video, Attorney Burton discusses holding property as Tenants in Common, as Joint Tenants, and as Joint Tenants with Rights of Survivorship, and a final way for married couples to hold title as Joint Tenants with Rights of Survivorship called Survivorship Marital Property.

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Hello and welcome back!

I'm Attorney Thomas Burton. I'm an estate planning and asset protection attorney here in Wisconsin.

In today's topic, we're going to talk about "Three Ways to Hold Title to Real Estate in Wisconsin".

So many of you know, I use this YouTube Channel to educate and inform, both the public and my clients, about topics under Wisconsin law related to real estate, estate planning, business law and asset protection. In today's video, we're going to talk about the three ways you can hold title to real estate in Wisconsin. Why this is important, is title can often dictate what happens to the property, especially in the absence of any estate planning documents.

So we're going to talk about the three ways to hold title and then talk about a special way married couples can hold title at the end.

The first way to hold title to real estate in Wisconsin is as 'Tenants in Common' and this is what you may often see happen if someone inherits a property jointly with their siblings or other relatives. It's often a 'Tenants in Common' situation. Tenants in common can sell their individual interest in the property without the consent of the other owners. They can be unequal shares, meaning you can have someone with 50%, someone with 30% and someone with 20% and they all have equal rights to possess the property. Now Wisconsin law presumes tenancy in common if intent to create some other form of property ownership isn't expressed. So when I talk about inherited property for example, like a family cabin, if it gets passed through a will and there isn't anything expressing otherwise, the children are going to take that as tenants in common. Let's say there's three children, one-third, one-third, one-third each and if you've seen some of my other videos, when I warn about the dangers of cloning property with people, one of the reasons why this can be dangerous is any tenant in common can sell their interest. It can also be good because a tenant in common can leave their interest in the family cabin to their children, let's say but that's where you can get those unequal interests if it was three children to begin with but then one dies and they leave it to their two children, suddenly you have two with one third and then you have two more with one sixth each and so, the interest keeps dividing that way. So tenants in common is the first way you can hold title to real estate in Wisconsin and again, it's the presumption, what the law presumes if you don't have contrary intent indicated to hold it another way.

So the second major way to hold property is 'Joint Tenants' but in order to have a joint tenancy, the joint tenants must take titles simultaneously at the same time. So it can't be that situation, I said where one inherited it from mom in 1995 and then a child inherited it from someone else in 2010, let's say and all joint tenants must have an equal interest in the property. So when it's created, they're 50-50 or one-third one-third, so you can leave a property to like your children for example, as joint tenants but they all have to have that equal interest when it's created. It can also be how like two people buy a property. Joint tendencies mean, a 'Joint Tendency' means the survivors inherit upon death. So one dies and the other becomes, if it's like 50-50, one dies, the other becomes 100% owner. If you have one-thirds here and let's say 'A' dies, then their third gets split between 'B 'and 'C' and each of 'B' and 'C', now have 50%. So instead of going to A's children let's say, if they had children, it goes to B and C. So this is sort of a last man standing type of arrangement and in our example of a cabin, if you did this this would mean that whoever survived the longest, ends up as the 100% owner of the cabin, for those joint tenants. If there were three joint tenants for example and the first two died, the third one ends up with 100% at the end, then they have the entire interest in the property to transfer as they wish, at their death. Now joint tenants could all agree to transfer the property to another form of ownership or if it's my cabin example what I recommend is a trust. So that the trust could hold title and continue throughout the generations and then dictate what happens when someone dies and things like that, without using a 'Tendency in Common', where one owner could sell on the others, without their agreement.

Now the third way to hold title in Wisconsin, is unique to married couples, under marital property law, we have marital property law in Wisconsin which is also called Community Property and this is actually most common out in the Western States, California has community property. We have a form of community property but we call it marital property, I think just to make it confusing for people. I don't know, I'm kidding there but the terminology used, if you look like in the entire country, they'll call it community property. So if you hear marital property in Wisconsin, just know it's our unique form of community property. So for spouses, you can hold a title as a joint tenancy and Wisconsin law presumes, joint tenancy for spouses unless tenancy is common is expressed in the document and then we go to 766.60 which is marital property, you can hold title spouse A and spouse B as marital property or survivorship marital property. So if you're married in Wisconsin and you want the surviving spouse to receive the marital home, 100% upon your death, survivorship marital property is a great way to do this because it gets to the surviving spouse as a non-testamentary transfer upon death, without probate by virtue of how title is held on the deed. So if that's your intent, this is a great estate planning device you can do without even having a will or trust in place, at least, for to provide some security if one spouse dies, it would all go to the surviving spouse without a time expensive probate, without the time and expense of probate court process. So survivorship marital property is a very common way you'll see married couples hold title to the marital home on their deed and it's a good idea to check your deed and see how it reads. Marital property came into effect in Wisconsin in 1986, so if you got married and bought a home before 1986, this terminology might not be used on the deed but if it has joint tenancy, you may have used one of the previous forms of ownership and if it is indeed marital property, you may hold it that way but when you're doing your estate planning, look over the deed with your lawyer to make sure, if that's your intent that you can hold it that way as survivorship marital property. The great thing is as I just mentioned, at the death of the first spouse, it all goes to the survivor, no probate required and then the additional bonus here is you get a double step up in basis on the entire property on the death of the first spouse. So without getting too detailed into basis here, basically when you buy a home, let's say you buy it in 1980, for $100,000 and in 2020, the first spouse dies and it's worth $300,000, well your basis in the property is generally the amount you paid for the property plus any improvement but real estate often appreciates and if it appreciated more than the amount of your improvement, you have a taxable gain there between the hundred thousand and three hundred thousand. When in a community property state, this is unique if you hold it as survivorship marital property, you can get a double step up in basis on the entire property, on the death of the first spouse instead of just on the one half undivided interest and marital property that spouse owned. So this is an additional bonus under IRS rules and marital property law for a surviving spouse and another great reason you might want to consider holding property as survivorship marital property, if you're a married couple.

So those are the three ways to hold title to real estate in Wisconsin and remember, title is going to dictate a lot of things, so if you're considering buying a property or own property, check the title to your deeds, to see how title is held and what would happen, if you would pass away.

So I hope this has been helpful to you. If it has, consider giving us a 'Like' and 'Subscribing' to the channel, so more and more people can see and benefit from this information as well.

Thanks for watching and we'll see you next time.

© 2021 Burton Law LLC. All Rights Reserved. Transcript and captions provided for ease of access for the hearing impaired. For questions about this topic, or to suggest a topic for a future blog post, please contact the office.

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