What Is Tenancy in Severalty?

Tenancy in severalty — also called sole ownership, ownership in severalty or sole and separate ownership — is a way of titling real estate to signify that you own the property by yourself rather than jointly. In a legal context, the term severalty indicates that the owner has severed their interest from others and is acting as an individual, not as part of a joint interest.

Tenancy in severalty and estate planning

Tenancy in severalty signifies sole ownership of property, which means it won't be automatically transferred to heirs. By definition, tenancy in severalty does not name other owners or beneficiaries. To ensure your property is passed on according to your wishes, you can put it in a living trust.

Without a trust, your property could go into probate, a legal process of distributing assets of someone who has died. Probate is time-consuming and could tie up your assets for months or years. The process could also significantly reduce the value of your assets because of attorney costs, court fees and taxes.

Pros and cons of tenancy in severalty

Pros

• Fewer dependencies. You do not have to share your assets with anyone or get their permission on decisions relating to the assets.

• Avoids pitfalls of splitting up with co-owners. Because your property has only one owner, it eliminates the possibility of disputes that may arise out of joint ownership. With joint ownership, a divorce or breakup could require refinancing property under a single name, potentially with less-favorable rates. If the property were only in your name, refinancing wouldn’t be necessary.

Cons

• No named beneficiaries. Other types of ownership name beneficiaries or share ownership, so there's a clear path for the assets when you die. Not so with sole ownership.

• Subject to probate. Without your having a named beneficiary, a probate court may have to determine who inherits your property. However, you could still bypass the probate process by putting your real estate into a living trust.

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What other ownership structures exist?

There are several ownership types property owners can choose to title their real estate:

• Tenancy in common. This ownership type is for property owned by two or more people. The percentage of ownership does not need to be equal among the owners. When one of the owners dies, their share can be inherited by anyone they had chosen.

• Joint tenancy with right of survivorship. In this setup, two or more people buy property with equal ownership of the asset. When one owner dies, their share divides equally among the other owners.

• Tenancy by entirety. This ownership type is available only to married couples. It acts like joint tenancy with right of survivorship. There are only two owners of the property, and each spouse owns an equal share. When one spouse dies, the other spouse inherits their share of the property.

• Community property with right of survivorship. This ownership type helps property owners avoid probate in community property states such as California. Like joint tenancy, the couple equally own the property. When one spouse dies, the property automatically passes on to the surviving spouse without going through probate. It also protects a spouse's interest in the property because an owner cannot will it to someone else.

Who is tenancy in severalty right for?