The pitfalls of holding property in joint tenancy or as community property

Paul A. Hanks, Attorney & Broker

The purchase of a new home is a most exciting time for a couple. Once your offer has been accepted and escrow opens, it is natural for thoughts to drift away from the minutiae of the transaction. We have agents and escrow officers and title reps to handle all that. Your mind is free to roam and ponder decorating your beautiful new property, giving it your unique touch and flavor, and entertaining in your new home.

The vesting of title to your new home is certainly not something at the forefront of your mind. Not surprisingly, when the escrow officer asks a couple how they want title to vest in their new home, the question often does not trigger much analysis before the couple picks one of several options presented to them.

If the couple intends to make this home their primary place of residence, it is most common for the couple to choose to have title vest in their individual names, typically as joint tenants or as community property with right of survivorship. When title to property vests in the names of husband and wife as joint tenants, each spouse holds a 50% interest in the property, and upon the death of one spouse title to the entire property is held by the surviving spouse.

Notably, California is a community property state, and some couples opt to have title to vest in their names as “community property with right of survivorship.” An interesting wrinkle to holding title in this fashion is that either spouse may create a will which leaves their one-half community interest in the home to someone other than their spouse. In the absence of that having been done, upon the death of the first spouse, title to the entire property will pass to the surviving spouse.

There is a frequently overlooked downside when a couple holds title to real property in joint tenancy or as community property with right of survivorship. The danger arises most often where the couple has children of their marital union who they wish the home to pass to after the death of both spouses. Since the home has not been titled into a trust but is merely held in joint tenancy or as community property, the home is at great risk of escaping generational passing. In the absence of a living trust, once the first spouse dies the surviving spouse can add anyone to title who they desire, and often this turns out to be a new partner in life.

Elder financial abuse is also a great concern and as the surviving spouse ages and develops physical and mental infirmities, the protection that a properly drafted trust can provide is invaluable. In the absence of such a trust customized to deal with issues of incapacity, the elderly are at risk of financial abuse which sadly often involves the unknowing transfer of their home.

A living trust would put the brakes on these scenarios and preserve the estate for the next generation as it should be so preserved. A living trust is one critical piece of a comprehensive package of estate documents functioning in harmony to hold property in trust, preserve the assets of your estate, avoid probate, and safeguard the interests of your chosen beneficiaries.

Attorney Paul A. Hanks operates Ironclad Living Trusts & Rocket Realty, 28581 Old Town Front St. in Temecula, and can be reached by calling 951-587-3737 or by email at