Single seniors looking to buy a home together gain several advantages, but there are certain legal issues that need to be addressed to protect buyers and their heirs.
Buddying up to buy a retirement home is a great idea for single seniors who have more purchasing power together than they could on their own. But according to NJ 101.5 in “Buying a retirement home together,” certain estate planning aspects need to be addressed so that if one of the owners passes away or if the situation doesn’t work out, the other owner has some level of protection.
Titling the property is critical in eliminating potential problems in the future.
There are two ways to title the property— “Joint Tenants with Rights of Survivorship” or as “Tenants in Common.” With Joint Tenants with Rights of Survivorship (JTWROS), each party owns the property equally and undivided. Depending on state law, if one party wants to transfer his or her share to another person during his or her lifetime, the other owner has to consent and sign the resulting deed. After the death of one owner, rights of survivorship mean that owner’s share is transferred automatically to the surviving owner. These survivorship rights trump the deceased owner’s will or state inheritance laws.
Tenants in Common (T-I-C) is where owners own equal or unequal shares of the same property. Each owner has full control over his or her share. The one owner can transfer his or her share to another person at any time without the approval of other owners. If an owner dies, this individual’s share of the property can be passed along to a person named in his or her will.
If you choose T-I-C, it’s important that both owners have a current Last Will and Testament that designates how each share of the property is dealt with upon one owner’s death.
Sharing a home with another senior has many advantages, and as Baby Boomers age, this trend may gain more popularity. Because of the age and stage of those involved, it’s important to ensure that all owners have their estate plans in place to protect each other and their heirs. An experienced estate planning attorney should be part of the process.
Reference: NJ 101.5 (August 2, 2016) “Buying a retirement home together”