Estate Planning | III. Types Of Property Interests

In the US, property interests are categorized into three categories:
1. Real Property: land and anything permanently attached to the land
2. Tangible Personal Property: Property not affixed to the land and generally movable
3. Intangible Personal Property: property that is not real property and without physical substance

Main factors in property interests (Title and Ownership)

Number of owners, right to transfer, automatic survivorship feature, included in the gross estate, included in the probate estate.

Sole Ownership - Fee Simple

Fee simple ownership is the complete ownership of property by one individual who possesses all ownership rights associated with the property, including the right to use, sell, gift, alienate, convey, or bequeath the property.

Tenancy in Common (TIC)

Tenancy in common is an interest in property held by two or more related or unrelated persons.

Joint Tenancy with Right of Survivorship (JTWROS)

Joint tenancy is an interest in property held by two or more related or unrelated persons called joint tenants. JTWROS avoids the costs and delays of probate, but it is included in the decedent's gross estate to the extent of the decedent's original contribution percentage.

An exception to "the actual contribution rule" exists for gifts of a joint interest in a bank account or Series H bond.

Tenancy by the Entirety (TE)

Tenancy by the Entirety is very similar to joint tenancy between a husband and wife. It applies to joint ownership only between married couples, neither tenant is able to sever their interest without the consent of the other tenant, property ownership interest is automatically transferred to the surviving spouse upon death, and it may involve the ownership interest of either real or personal property.

Property Own Type Value Included in Gross Estate Included in Probate Estate Auto Survivorship Feature Qualified for Unlimited Marital Deduction Is the Property Partitionable without Consent
Fee Simple 100% Yes 100% No Yes, if spouse is the beneficiary N/A
Tenancy in Common % Owned Yes % Owned No Yes, if spouse is the beneficiary Yes
Joint Tenancy WROS Actual Contribution Rule % Owned No Yes Yes, if spouse is the beneficiary Yes
Tenancy by Entirety 50% Deemed Contribution Rule No Yes Yes No
Community Property 50% Deemed Contribution Rule Yes 50% of Value No Yes, if spouse is the beneficiary No

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