When 2 or More People Own Michigan Real Estate (Episode #279)

0:31 Well, good afternoon, Michigander. It is Tuesday, May second, twenty twenty three, and of course this is Tuesday with Tom, Michigan's only weekly podcast where we do answer your questions about a state planning and a state settlement in Michigan, and we don't send you a bill. As always, I'm your host, Tom Doyle, the state Planning attorney, lifelong Michigan resident, and an ambassador for all good things in this great state of Michigan. Welcome to today's program. We're looking at last week's episode. I had a theme that was going on for a couple of weeks about rejecting an inheritance. Last week's episode I talked about six reasons or six times that you might want to consider rejecting and inheritance. So if you want to know more about how you reject an inheritance or why you might consider it, I would invite you to listen to the last couple episodes of our podcast. Today's show, I'm going to talk a little about real estate today and how people can own real estate and today's so today's program is when two or more people own Michigan real estate.

1:56 But please remember that what I'm about to do discuss as always is for educational purposes only. It is not intended to be legal advice. You need to work with your attorney to determine what is appropriate for you and your estate plan when two or more people own Michigan real estate, So when we have multiple owners of real estate and Michigan, we need to understand that there are a number of different ways that multiple people can own Michigan real estate. So that's what we're going to spend a little time talking about those. One of the those ways is what we call tenants in common. So let's say my brother and I own Michigan real estate and we own it as tenants in common.

3:13 What does that mean? That basically means, in that case, if there's two of us, we each unless a deed discuss identifies differently, we each have a one half interest in the property. Now we could adjust that. We could have a deed that perhaps gives me a seventy five percent interest in the property and my brother are twenty five percent, but we each have a particular interest in the property, and if the deed doesn't say otherwise, it's going to be an equal interest in the property. If I die as a tenant in common. My interest in the property is part of my estate, so it can be transfer It can be transferred via a will. If I don't have a will, it'll be subject to interstate succession. If I'm looking at putting together, perhaps an estate plan that's going to include a living trust, I can convey my interest in that property that I own as a tenants in common into my living trust. Basically, there is no right of survivorship. It's simply mine. I can do with it as I wish, as can my brother. My brother can sell his interest in that property.

4:35 It would be part of his estate if he still owns it at the time of his death. He could in fact sell that interest to anybody that he wanted to sell his interest to if they were willing to buy it. And I would now be stuck, if you will, being an owner of real estate with somebody else. So that's a way that tenants in common work. And if two or more people in the state of Michigan own real estate, and the deed does not define differently, and the people are not married, so if they are single people and they simply have a deed that conveys property to two people or more, under Michigan law, it will be interpreted as being tenants in common. So again, take my brother and I. We obtain a deed to property that says to Thomas Say Doyle and Patrick Doyle, and it doesn't define it differently, we will be taking that property as tenants in common. A second way for multiple people to own property in the state of Michigan is what's called joint tenants joint tenants. Now, that joint tenancy has to be specifically stated inside the deed in which the ownership of the property

6:06 is created. Why because I just noted if it doesn't state it in the deed, and if we're not married, it's going to be tenants in common. So if we want it to be joint tenants, it has to be stated in the conveyance the deed that would create that joint tenants, and it's going to say something like as joint tenants, or it might even say as joint tenants and not as tenants in common. But it has to be specifically indicated inside the deed. Now, what's the difference. If my brother and I use that example again, my brother and I own property as joint tenants, then I can convey my interest in that real estate to somebody else, and when I do that, it's going to now create tenants in common between the person I conveyed the property to and my brother. So essentially I'm extinguishing the joint tenancy when I convey the property to somebody else. Essentially the concept is as a joint tenancy, we each own an interest in the property, but we can convey that property to somebody else. However, there is a right of survivorship. So if when I die, I haven't conveyed that interest,

7:46 my brother will then own one hundred percent of the real estate. So I can, if you will, disjoin the joint tenancy by conveying the property to somebody else, and end up creating a tenants in common, again with the interest of each person being able to be as part of their individual estates, not as common. We don't find a lot of ownership out there as joint tenants. What we are likely more likely going to find ownership is going to be what we call joint tenants with full rights of survivorship. And that's what the deed would say. The deed would say joint tenancy with full rights as survivorship. Because again, if it's silent and we're not married. It's going to be tenants in common if it says as joint tenants or as joint tenants, and not as tenants in common. It is not going to be joint tenants with full rights of survivorship unless the deed says that it is joint tenants with full rights of survivorship. Now, what's the difference. The difference is is that joint tenancy with full rights survivorship can't be severed by only one of the joint tenants. So again, take my brother and I. Let's

9:16 say we own real estate as joint tenants with rights as survivorship. What does that mean. It means if when I die, it's his, or if he dies first, it's mine, and I can't get rid of that survivorship. Unlike that joint tenant where I could convey the property somebody else, which would turn it into a tenants in common, where there would not be any survivorship rights of my brother, joint tenants with full rights as survivorship, I cannot extinguish his right to receive the property at the time of my death. I can't do that on my own. It would take both of us to do that. Now, a joint tenant with full rights survivorship can convey their interest to a third party, but when they do that, that third party is now going to be a joint tenant with full rights of survivorship. So it still is not creating a tenants in common where somebody to do anything that they want to do with their property. It still is going to be joint tenants with full rights of survivorship. So unmarried people generally, we're going to be looking at either tenants in common where each person has their own interests in the property, joint tenants where there's going to be some rights of survivorship but that could be eliminated by one of the joint owners, or joint tenants with

10:52 full rights of survivorship where the survivorship rights cannot be terminated by any one of the parties. Now, all of these ownership tenants and common joint tenants, joint tenants and full rights advivorship, they don't necessarily have to be equal. They could be unequal amounts, although the joint tenants with full rights drivorship wouldn't ever be an unweak equal amount, if you will, because of the survivorship and the same thing with joint tenants. So if you're looking at owning property with somebody that you're not married to, and you don't want it to be a fifty fifty, normally that's going to be accomplished by having the ownership as tenants in common. Now, what about married people? Married people a little bit different. For married people, if the deed indicates that they are married, then the deed will be interpreted as owning what we call tenancy by the entireties, tendancy by the entire think of it as an enhanced joint tenants with full rights of survivorship. And what is that. Well, unlike joint tenants with full rights of survivorship, property that's owned as tenants by the entireties, one of the owners cannot convey their interest to a third party. So with a married couple who owns real estate as tenants by the entireties, either of

12:30 the spouses cannot convey their interest in the property to somebody else. That's because the law interprets them as each owning one hundred percent of the property, just like joint tenants with rights of survivorship. Though when one of the spouses dies, the other spouse will in fact own the interest of their deceased spouse, so there's no probate involved, which is why commonly married people are going to own the real estate as tenants by the entireties. That avoids probate when the first of them dies and neither of the married people can convey their interest in that property to another person. Again, if you're married in the state of Michigan and the deed indicates that you're married, it will be interpreted as owning the property as tenancy by the entireties. Now, because neither party, neither of the married people can convey their property to somebody else, that also creates a very unique protection from creditors. And that is this, if let's say one of the married people has an automobile accident and get sued and there's a

14:07 large judgment entered against them, and somebody wants to collect that judgment against what that person owns, they cannot. They cannot collect that judgment against real estate that is owned by tenants by the entireties in the state of Michigan. So it has a unique protection from creditors, which is why, in addition to the right to have the property convey at the time of death without going through probate. There is an important protection that that property has from creditors, and what you have to be careful of is sometimes when you're looking at as part of an estate plan, you might be considering taking estate that you and your spouse jointly owned and disjoining it. Maybe you're going to each have individual trusts and you've got jointly owned real estate, and what you want to do is put a half interest of that real estate in each of your trusts. Understand, when you do that, you are disjoining, eliminating that tendency by the entireties, and as a result of that, you are giving up that unique protection from creditors. And that leads us to another conversation that Amanda and I always have with clients when we start talking about owning cars. If spouses own

15:43 cars jointly and one of them gets an automobile accident and somebody is now going to sue because of the injuries they sustained in that accident, they're going to sue both spouses. They're going to sue one spouse as the owner, one spouse as the operator, and if they get a judgment, they will get a judgment against both spouses, and whenever you can get a judgment against both spouses, this unique protection from creditors does not apply because the judgment is against both spouses. So the creditor could go after the real estate that is owned by both spouses. Which is why you will hear a man and I say to people, don't jointly own your cars with your spouse in order to keep that protection from creditors. We don't want to set up situations where there is the possibility that someone will be able to obtain a joint judgment against spouses.

16:47 And the most likely where that's going to happen is with a motor vehicle. Now, creditors can let's go back and look at it. Creditors can go after your interest. If you own property as a tenant in common, they can go after your interest, require your interests to be sold in order to pay off their claim. They can go after your interest as a joint tenant, all right, because again you could convey your interest in that property and turn out to be tenants in common. But it is this very unique protection for married people in the state of Michigan that tenants by the entireties provides that you need to be aware of that, and if you can, you normally want to protect that. Now, that's one of the reasons that many of us today when we're putting together, let's say, a joint trust for married people, and we're now going to transfer real estate into that joint trust so that it doesn't have to go through probate, so they'll be controlled by the terms of the trust. Many of us today are using a Ladybird deed, and I've had other episodes of this program about Ladybird deeds, because by using a Ladybird deed, we are able to keep that ownership as tenants by the entireties while both spouses are still alive, where As if today we simply had

18:21 a deed and we transfer the ownership of the property today into that trust, we would be giving up that protection that those spouses enjoyed as tenants by the entireties. So again, if you're looking at having a joint trust as part of your state plan, and you're going to be transferring real estate into it, understand the importance of owning that property as tenants by the entirety's husband and wife, and understand what you're giving up if you, in fact transfer that property today as opposed to perhaps using a ladybird that would maintain that joint maintain that tenants by the entireties, which maintains that protection while both spouses are alive.

19:14 Many times, many times when clients come to talk to Amanda and I, they will say something to us, well, you know, my mom died, my dad died, some relative died, and they left us my siblings and I maybe I've got five different siblings and they left us their real estate and we own it jointly. Well, the one thing that Amanda and I are both going to be insist upon is we want to see the deed that defines how you in fact own that property, because in many, many cases, people think that they own it jointly with some rights of survivorship, when in fact they only own it as tenants in common. Or conversely, they think they own it as tenants in common and it turns out that they don't own it as tenants in common, and that ownership and that property then obviously can impact what they can do in putting together their own estate plans.

20:15 So it's important to know how you own real estate with somebody else, so that you know what your rights are relative to that real estate, be it to inherit that property from the other owners and or to be able to do something with that property as part of your own estate plan. Bottom line, when two or more people own Michigan real estate, because there are different ways for that real estate to be owned, you need to understand how you actually own it and what the rights that you have now in that real estate are.

21:00 If you have any questions about your ownership of that real estate, certainly something that amand and I am working with, you can, by virtue of reviewing your deeds, make a determination and explain to how it is that you actually own that real estate. Of course, in addition to simply helping answer your question about how you own real estate, A man and I would be honored to have the opportunity to help you protect your loved ones by putting together state plan, perhaps amending a plan that you already have, or certainly assisting you and settling a loved one and su State and I recommend that you simply visit our website, which is DOI LAWPC dot com. At the website, you're going to find information on how to schedule an appointment with this whether that's going to be a zoom call, telephone call, or a consultation in the office. We also have at our website we're Legal Store. There you have the ability to order individual documents. Perhaps all you need is an updated certificate

22:30 of trust. You can order that certificate of trust through the Legal Store so that it can be prepared and delivered to you electronically. So again, DOILAWPC dot com is where you're going to find all that information about that and how to schedule a consultation with our office. And that's going to be it for today show. As always. Oh, if you have a comment about the program, a topic that you would like to have me discuss, questions that you'd like to have answered, please send me an email Tom at Tuesday with Tom dot Tuesday with toom dot com. Please follow us too on Facebook.

23:22 Invite your friends and family to follow us as well that we'd be Tuesday with Tom at Facebook. Also the office is Doyle Law PC on Facebook as well. Of course, a program is available probably anywhere that you choose to listen to your podcast be at Apple Podcast, Spotify, Google Podcast, iHeartRadio, Spreaker, wherever it is. There are many many channels out there for listening to podcast and we are likely you will likely find Tuesday with Tom at your favorite podcast service. You can also all always ask your smart speaker to play Tuesday with Todd. Well, thank you again for spending some of your time with us today. As always, I hope that you have an awesome day and an awesome week in Michigan. Stay safe. Tuesday with Tom has been brought to you by the estate planning attorneys at Doyle Law PC. To learn how we can help you with your estate plan or with settling a loved ones estate, please call us today at five one seven three two three seven three six six. That's five one seven three two three seven three six six