What does vesting even mean?!?

Hi everyone! Today I want to talk about something that comes up a lot...vesting! Most people I talk to don't even know what the word "vesting" means. It's really simple, it just means how a person takes title to their real estate! I've included a little chart at the bottom of this page to help you understand some of the benefits and consequences of the different ways you can hold title!

One of the biggest questions I get is "how should a married couple hold title?" Well, ultimately you will have to make that decision, but I can give you a few things to consider! The big one that people get confused about is "community property", this is one way a married couple can hold title, but it doesn't mean what most people think it means. When you own real estate as community property, the husband owns 50% and the wife owns 50%, and each one's 50% ownership can be willed to anyone... the surviving spouse, a brother, child, cousin, etc. Most people think that upon their death, their surviving spouse will end up with 100% ownership, but that's not the case. This misunderstanding can be an awful consequence for your loved ones to deal with. Can you imagine already mourning the loss of your spouse, and then in the midst of that you have to deal with probate court and costs just to be the sole owner of your own home? Or finding out that your spouses distant relative is going to try to get some interest in your home and challenges you in court? Unfortunately things like that do happen. There is the option of "community property with right of survivorship" or "joint tenants", both of these offer protection in the sense that if and when one spouse passes, the other will automatically have full ownership of the property!

There are several other ways you can hold title, there is sole ownership, "tenants in common" which I typically see on investments with business partners, they can divide the ownership by any percentage they need to, and sell or will their ownership percentage to someone else. The best option is probably going to be holding title in a revocable trust, it gives you the advantage of avoiding probate costs and delays, and offers privacy that a will can not (wills become part of a public probate file). Also, court challenges on a living trust are far less likely to happen, however they happen quite frequently on wills, meaning a disappointed relative may challenge what is in the will trying to get their cut of pie. 

I know this can be a sensitive topic, but I hope I've helped you see the importance of doing your due diligence when it comes to making this decision and maybe even answered a question or two for you:-)

As always, please feel free to contact me if you have any questions!

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