Two co-tenants discussing what they need to know about tenants in common probate.

3 minute read

Tenants-in-Common Probate: What You Need to Know

Is probate required for tenancy in common? Learn more about how probate works, specifically when it comes to a tenants-in-common living situation.

Patrick Hicks

Patrick Hicks, @PatrickHicks

Head of Legal, Trust & Will

Tenants in common is a great ownership strategy, especially in today’s competitive and expensive housing market. The co-ownership of a single property by two or more “tenants” can simultaneously mitigate risk, reduce expenses, and ease the burden of ownership. That said, the presence of multiple owners may also coincide with unique obstacles that traditional owners don’t have to deal with. Tenants-in-common probate, for example, is something single owners don’t have to worry about, but co-owners need to be very aware of.    

If you have entered into a tenant-in-common agreement, you need to know what happens to the property when you pass away. This guide will tell you everything you need to know about the tenants-in-common probate process (and how to possibly avoid it with a proper end-of-life plan), including:

What is Tenancy in Common?

Tenancy in common, often referred to as tenants in common, is a form of concurrent real estate. As its name suggests, concurrent real estate is essentially legal jargon that describes the co-ownership of a single property or parcel of land. As it turns out, tenancy in common is the most popular form of concurrent real estate, but it’s worth noting that it has nothing to do with actual tenants (renters). Instead, tenancy in common suggests two or more parties have legally agreed to share ownership in one piece of real estate. In return, each party receives a separate, distinct, and proportionate share of the asset, relative to their own equitable interest. 

Tenancy in common is generally reserved for those who are comfortable owning a piece of real estate with other owners but would prefer to not have to enter into a formal partnership or joint tenancy. Tenancy in common is also a common byproduct of the estate planning process. In the event that multiple heirs have been left a single piece of real estate, courts or executors will often resort to tenants-in-common probate resolutions which divide the property amongst beneficiaries.      

What happens when one of the tenants in common dies?

When one of the tenants in common passes away, the nature of the original agreement does not automatically pass the deceased’s equitable interest to the surviving owners. Instead, the equitable interest is added to the deceased tenant's estate. Once the equitable interest in the subject property is added to the estate it will be dealt with in the respective Will or by the executor of the estate plan.

The surviving owners, on the other hand, retain their equitable interest in the property. In fact, nothing changes for the surviving owners, with one exception: they will share ownership of the property with the deceased tenant's heirs or beneficiaries, whoever is left the asset in the Will. If there is no Will, the equity will be subject to the laws of intestacy, which typically resort to distributing assets to a surviving spouse or children. Either way, the new owner will become tenants in common with the surviving owners.          

Is Probate Required for Tenants-in-Common Property?

Probate is not required for a tenants-in-common property. That’s not to say a concurrently owned property can’t go through the probate process, but rather that there are certain circumstances that would eliminate the need for probate. Largely, whether or not a concurrently owned home goes through the probate process depends on the municipality in which the asset is located and unique situations. 

If, for example, the death of a tenant in common dies and the equity is transferred to an estate, their share of the property may need to go through probate. Unless other arrangements were made, the probate process is the only thing that could facilitate the transfer of the asset to surviving beneficiaries. It is worth noting, however, that there are ways to avoid putting the equitable interest in a tenants-in-common property through the probate process.

Is There a Way to Avoid Probate of Tenants-in-Common Property?

It is entirely possible to avoid the probate process with a tenants-in-common property. In fact, it may even be possible to avoid probate if the equity eventually transfers to an estate. Some municipalities enforce laws that make things easier on relatively small estates with an equally small ownership share of the tenants-in-common property. 

Outside of local laws, the only other thing that can prevent a tenants-in-common property from going through the probate process is the establishment of a Living Trust. If a co-owner places their equitable share of the property in a Living Trust, the trustee may eventually be able to distribute it to the named beneficiaries, all without having to go through probate.    

The tenants-in-common probate process may or may not be avoidable, depending on your particular situation. However, those with the opportunity to avoid the process need to take advantage of it before it’s too late. Therefore, if you want to avoid the tenants-in-common probate process, you will need to get your end-of-life plans in order as soon as possible. Consult with a professional to set up your own Living Trust; doing so may save your beneficiaries a great deal of time and money.   

Set Up Your Trust Today with the Help of Trust & Will

Tenants in common can be a great ownership strategy, but anyone who chooses to go that route needs to be aware of what happens to their equitable interest when they pass away. If for nothing else, the tenants-in-common probate process can be lengthy and expensive. Fortunately, deploying a sound end-of-life plan that involves a Living Trust can transfer the asset to beneficiaries without the hassle of going through probate.

Don’t let your real estate assets go through the probate process if they don’t have to. Instead, set up a Living Trust to pass the assets on to loved ones with as few obstacles as possible. Here at Trust & Will, we’re here to help keep things simple. You can create a fully customizable, state-specific estate plan from the comfort of your own home in just 20 minutes. Take our free quiz to see where you should get started, or compare our other estate planning and settlement options today! 

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