During your escrow process, you will be asked by your agent, lender and/or escrow officer how you plan to hold title. There are several options for California residents. Before you choose, it is best to confer with your expert advisors, including your attorney and accountant. How you hold title can have significant implications on your estate (if your property transfers upon your death) and on your taxes.
The common ways of holding title for co-owners includes (but is not limited to) Community Property, Community Property with Right of Survivorship, Joint Tenancy, Tenancy in Common, Partnerships and Trusts. What you choose varies by your relationship to the other party (marital status legal relationship, etc.), how you are dividing the interest (for example, in a Tenancy in Common, one party may own 80% and another may own 20%), on the title (who owns an interest and how is it owned), on possession, what happens upon death and the rights of each of the owners. Complicated, yes? I've noticed that some clients are so busy during the process of buying a home that they don't take the time to consult with their experts and need to change the way they hold title in the future.
For same sex couples, the same choices are available. In California, the choice of how to hold title for same sex couples purchasing together is even more important. I have heard of stories where one partner dies and the other partner is forced to sell their family home to pay estate taxes because their basis is not adjusted the way it is for heterosexual couples. How you hold title has implications on ownership, taxes and what happens upon your death. Because California recognizes domestic partnerships, marriages in California, marriages performed in other places (like NY or CT) but the Federal government does not, consulting with your attorney early in the process is really important.
Confused? Me too! If you need a referral to attorneys who handle trusts, estates and real estates, please let me know.