What Will Happen to My House When I Die?

andrew • November 8, 2022

For most Americans, the most valuable asset that they own is their home. This is especially true in light of the rapid appreciation in real estate values over the last 5 years. Do you know to whom your home would transfer to upon your death? What if you and your spouse both passed simultaneously or in quick succession?

joint ownership

For married couples, most homes that they purchased are owned “jointly.” This means that both spouses are listed on the deed and it is specifically stated that they are taking the property as “joint tenants.” If that is what you intend to happen, it is extremely important to make sure that the “joint tenancy” language is on the deed because, in Colorado, the default interpretation of a deed with multiple owners is that the property is owned as a “tenancy in common.” This may seem like a negligible difference; however it can have enormous impacts as to who can occupy the residence after your death and who will receive the house or proceeds from the sale of the house after you pass.

tenants in common

Joint tenancy includes a right to survivorship, which means that the surviving spouse would fully own the home after the first spouse passed away (subject to any mortgages or other liens on the property, of course). Spouses who own the property as tenants in common, however, each own ½ of the home. There is no right of survivorship, meaning that the ½ ownership held by the deceased spouse could be subject to distribution under the terms of their Will, and those may provide that a child is to receive the house. This can create sticky situations whereby children (or step-children) could be trying to get the surviving spouse out of the home, or obsessing over upkeep and maintenance in order to preserve their future inheritance. It is true that surviving spouses have the right to elect to take an “amount equal to fifty percent of the value of the marital-property portion of the augmented estate” (if they have been married for 10 years). Depending on the assets in the estate, however, this may not allow for the surviving spouse to receive full ownership of the house (in Colorado, spouses are entitled to an elective share equal to 5% per year of marriage, up to 50%). Furthermore, while family relationships may be cordial in the moment, they are always subject to change, and money can often bring out the worst in people.

passing real estate to kids

What if you want your children to own the house after you pass? Co-ownership of real estate can present enormous challenges and often results in damage to both familial relationships and the property itself, so it is essential to make the ownership and operation of the property as clear as possible. For example, who is responsible for the taxes? Maintenance? Improvements? What happens if one of the children stops contributing their fair share? Also, if you have children from a prior marriage, and want them to share in the proceeds, does your plan guarantee that they can’t be disinherited?

Conclusion

Passing on your home to your surviving spouse and descendants can be much more complicated than it appears at first glance. It would be a good idea to make sure that your home is titled how you intend it to be and that your current estate plan transfers your home the way you want it to. It is not uncommon for individuals to think their property was deeded a certain way, only to find out that the actual deed says something very different after one of the owners passes away. The best way to prevent that situation is by being proactive. The effort up front to set a clear line of succession will pay dividends for your loved ones and make administration of your estate far simpler and less contentious.
If you have any questions about how your home is titled, or would like to create or amend your estate plan, please give us a call.

What next?

If you think it might be time to think through your estate plan, you can:

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Visit our estate planning page to learn more about how proactively thinking through your estate plan can protect you and your family, minimize hassle, lower the chance of family discord, and minimize or eliminate taxes.
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