There’s more to owning property than simply knowing where to sign your name.
You can own investments several different ways. If you buy a mutual fund, for instance, you can own it in your own name, or jointly with one or more other people, or hold it as a trustee for the benefit of someone else.
In each case, the way you own an investment determines your rights as an owner, including whether you can sell the property or give it to someone else. Your parents, for example, could give property to you and your siblings in equal shares, allowing each of you the right to sell your shares separately. Or they could require that you all agree before any part of it could be sold.
Flexible ownership
Ownership can be changed, often relatively simply. If you want to make your spouse, your adult child, or some other person a joint owner of property that you now own alone, you can usually change the title with little hassle and rarely any charge. With a mutual fund account, for example, you write a letter of instruction to the custodian. With a stock, you arrange the change through your broker. In either case, you might have to get a signature guarantee from your bank.
With joint ownership, you and the other owner(s) have to agree before a change can be made. But if you agree, you can make whatever changes you want.
However, you should avoid acting too hastily on any change in ownership, especially during a period of stress or at a major turning point in your life. For example, lawyers often advise newly married people to keep assets they had before marriage in their own names at least for a period of time. If you live in a community property state, in fact, you may decide to hold premarital property in sole ownership no matter how long you’re married. Otherwise, you give up your right to own it exclusively in the future.
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Kinds of ownership
Basically, there are four ways to own property, whether it’s real estate (land and buildings), stocks, bonds, mutual funds, bank accounts, or almost anything else:
| Sole ownership | Joint tenants with rights of survivorship | Tenants by the entirety | Tenants un common | |
| Owners |
One person owns the property and controls what happens to it |
Two (or potentially more than two) people own the property equally |
A married couple who own the property together |
Two or more people own a share—often but not always an equal share—of the property |
| Right to sell |
There are no limits on selling it, giving it away, or leaving it by will as long as you own the property outright |
One person can sell his or her share, but usually only with the consent of the other owner(s) and only if the proceeds of the sale are shared equally with the other owner(s) |
Neither can sell without the other’s permission |
Each owner can sell his or her share independently and keep the profit. The other owner(s) have no right to inherit (though they could), and they have no control over a co-owner’s share |
| In a divorce |
Property purchased during a marriage could be counted as marital property that’s subject to division |
If the owners are married, and they divorce, the property is marital property that may be subject to division |
Spouses become tenants in common, and either has the right to sell his or her half without the consent of the other |
Property purchased during a marriage could be counted as marital property that’s subject to division |
| At death |
Property can be left by will or put into a trust as the owner wishes |
When one owner dies, that share becomes the property of the other owner(s). It can’t be left by will to anyone else |
When one spouse dies, the other becomes the sole owner of the property. It can’t be left by will to anyone but the spouse |
Property can be left by will or put into a trust as the owner wishes |
You don’t always get it in writing
When you buy certain property, like a car or real estate, you get a title, or certificate of ownership, that names you as the owner. It must be signed over to the new owner when you sell. In fact, the process of finalizing ownership is often referred to as taking title. In the past, you also used to receive certificates when you bought stocks and bonds, which you had to safeguard and then sign and turn in when you wanted to sell. But when you buy securities today, ownership is recorded in book-entry form or held in the name of the brokerage firm. You can usually sell simply by giving instructions over the phone or online.
Aching joints
Joint ownership won’t always protect you from having the rug pulled out from under you, financially speaking. When you have joint checking or savings accounts, or any account that doesn’t require both signatures to transfer or withdraw money, either owner can take out every penny, perfectly legally.
Getting advice
If you’re married or involved in a long-term relationship, you should discuss ownership decisions with your lawyer and probably with your tax advisor.
Many married couples own all their investments, including their homes, jointly. There are good reasons for this, including the fact that it helps to establish financial equity between husband and wife and may prevent one partner — for whatever reason — from selling all the assets. But there are potential drawbacks to owning everything jointly, including protecting assets from estate taxes or claims from your or your spouse’s creditors.
Though you can’t prepare for every eventuality, your lawyer might advise you to limit joint ownership if one of you might be vulnerable to lawsuits because of your profession or other activities. Trying to shift ownership in the face of a legal threat usually doesn’t work.
When time counts
One caution:
There are times when a transfer of ownership might be challenged in court, such as in cases when you’re trying to protect certain assets or qualify for government assistance.
In those cases, transfers must occur by a specific date—sometimes as long as three years or more earlier—to be valid.
What Are The Types Of Property Ownership? by Inna Rosputnia
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