When a loved one passes away, the sudden responsibility of settling their estate falls on the executor or administrator, often a trusted family member who has just suffered a loss and who, as a rule, does not routinely handle legal matters.
The process can be complex and sometimes costly, depending on the complexity of the estate and how the assets were titled.
The disposition of the deceased person’s estate is generally governed by the instructions recorded in their will subject to a legal process called probate, from a Latin word meaning to prove or verify. However, there are several ways to record ownership that allow assets to pass directly to designated heirs without the cost and delay of probate, some of which may be unfamiliar to families who have not established a comprehensive estate plan.
Real estate and financial accounts can be recorded in different ways depending on the objectives and relationship among the owners. American law regarding “tenancy” or possession of property derives from English common law dating to the Middle Ages that crossed the Atlantic with the early British settlers. As a further complication, U.S. common law has evolved differently in each state, resulting in sometimes disparate property laws across state lines.
The most common and familiar form of co-ownership is called joint tenants with right of survivorship, in which each owner holds an equal share in the asset and has complete control over the entire account or property without seeking consent of the others. A typical situation would be a husband and wife who own their home or a bank or brokerage account as joint tenants, although the owners need not be married or even related. Upon the death of one tenant, the other becomes the sole owner of the home by operation of law without going through probate.