Your home is a unique asset – the center of your family life and an important financial asset. When you bought your home, you may remember signing a deed, but do you remember what it says? Often, due to the excitement and stress of purchasing a home, and the small library of papers signed at the closing, the details in the deed can get lost in the shuffle.

The deed can help you understand how you hold title to your home, and the different types of ownership have different implications during your lifetime, and after your death. The three most common forms of ownership are (1) tenancy in common, (2) joint tenancy, and (3) tenancy by the entirety, and the differences among them are important to know.

Tenancy in common

If you and your spouse own as tenants in common, you each have the right to possess and use the entire parcel. Your spouse can sell his or her interest in the property without getting your approval or even notifying you. Further, your spouse’s creditors can attach to your spouse’s interest and force a sale of the property. On your death, your interest in that property does not automatically pass to your spouse, but becomes an asset of your estate.

Joint tenancy

If you and your spouse own as joint tenants, you each have the same right to possess and use the whole. Your spouse can still sell his or her interest in the property and his or her creditors can attach and force a sale. The main difference is that on your death, the property, by operation of law, passes to your spouse. Your spouse would then own the entire property individually.

Tenancy by the entirety

For married couples, there is a special type of ownership, in which the spouses own as tenants by the entirety. The right to possess and use does not change, but each spouse enjoys greater asset protection from the other spouse and that spouse’s creditors. First, your spouse cannot sell or transfer his or her interest without your signature. Second, the creditors of your spouse cannot force a sale to satisfy a claim against your spouse if you are still living in the house and using it as your primary residence. On death, as with a joint tenancy, the property automatically passes to your spouse.

In addition to the above, there may be instances where it makes sense for only one of the spouses to own the property or to own the property in a trust. When you are buying a home, be sure to review the deed with your estate planning attorney and discuss these different options to see how the ownership fits in with your overall estate plan.

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