Title is King: Ownership of Property in Missouri

How is your property held?  Are you the sole owner or is there more than one owner?  If there is more than one owner, are you a tenant in common, a joint owner, or (if married) a tenant by the entirety. Do you need the consent of another individual to sell the property?

The form of ownership that you have in a piece of property determines what you can do with it, how the property will be taxed, and what will happen when you die – whether the property will be transferred to your spouse, children, a joint owner and/or other heirs at law.

There are several ways real and personal property can be held.  Missouri recognizes four forms of property ownership: sole or individual ownership, tenancy in common, joint tenancies with right of survivorship, and tenancies by the entirety.

Sole ownership means that you are the only person who owns all the interest in a piece or property.  It is the simplest form of ownership and gives you the greatest control of any form of ownership.  You can give it away, sell, mortgage, or will your property to another person.  If you are married, however, your spouse would have to consent to the transfer of real property to others and to give up certain rights such as the dower or curtesy rights.

Tenancy by the entirety is a form of ownership that can exist only between a husband and wife. Each spouse owns 100% of the ownership. Since each owns all of the property, the property cannot be sold without the consent of both spouses. Creditors of one of the spouses cannot go against entireties' property to satisfy the debt of the one spouse. Upon the death of the first spouse, the surviving spouse remains as the sole owner of the whole property.

Joint tenancy with right of survivorship (JTROS) can exist between any two or more persons. All of the joint tenants have to own equal shares in the asset. A joint tenant can sell or give away his or her interest during their lifetime, but the interest is not inheritable upon death to the heirs. Instead, when a joint tenant dies, the interest is automatically passed to and is divided equally among surviving joint tenants. The last person alive becomes the owner of the entire property. Joint tenancy is usually created by the words "John Doe and Jane Doe, as joint tenants, with right of survivorship, and not as tenants in common."

Tenancy in common exists when two or more persons own an undivided interest in a property. The owners do not have to own equal portions of the property. A distinguishing feature of tenancy in common is that it is inheritable. The owner can sell, give away, or pass on interest to his/her heirs. The word "and" and sometimes "or" between owners' names creates tenancy in common.  If a deed or title does not state the form of co-ownership, the court usually assumes it is tenancy in common.

It is extremely important to know how your property is titled. The method by which titles are held can have important estate planning implications. Many times heirs discover property that was assumed jointly owned by parents only lists one parent on the title. Even if the deceased has a legal will or trust, the title of an asset actually takes precedent over the will or trust and may force assets to be divided differently than intended, title is king. For example, a father and son operate a family business together where assets are owned as joint tenancy. The father is a widow and expects to die before his son, who has a wife and four children. The father plans for his assets to pass to his son. However, what if the son dies first? All of the son's interests in the joint tenancy assets will go to the father, leaving the wife and four children out of the inheritance of this property regardless of what the will says. Titles should be reviewed whenever there is a change in marital status, change in number of children, or a death in the family. It is also important to review non-titled assets such as machinery, livestock, and personal assets. Taking the time to review the titles of assets can help to alleviate problems down the road.

Source: Nathanial Cahill, Agricultural Business Specialist