When a loved one dies, their assets and wealth will be distributed in accordance with their wishes, which will be detailed in their last will and testament. In some instances, though, contention can arise when an asset is left to two or more parties, and they must establish some fair way of sharing it, or its value.
What is joint ownership?
When a number of individuals inherit an asset, such as a property, land, or artwork, they become co-owners of the asset, and one of three situations can arise.
1. The will may specify the percentage value of the asset that each person owns. Each person, therefore, has the right to sell or give away their percentage value without requesting permission from the other joint owner(s). In the case of property or land, this is known as being “tenants in common” .
2. The will may specify that each joint owner receives an equal portion of the value of the property and a right of survivorship, meaning that shares cannot be dispersed without permission and that shares will automatically transfer to surviving owners upon the death of any of them. Where the inherited asset is a property or land, this is known as being “joint tenants with rights of survivorship” .
3. The will may leave the asset to a married couple, in which case it would become marital property and, therefore, equally owned by both spouses. Under Colorado law, this means that should either spouse die, the surviving spouse will become the sole owner of that asset.
Where a will does not specify whether the asset is being left to multiple individuals as joint tenants, tenants in common or as marital property, it is essential that the ownership structure of that asset is clarified at the earliest possible opportunity so that all parties understand their rights and responsibilities concerning selling or transferring the asset.
Joint ownership can be challenging
The deceased will have bequeathed the asset to joint owners in the belief that they would benefit from the gift. Unfortunately, in many cases, such a bequeathal is fraught with challenges, particularly where the new co-owners do not agree on how the asset should be managed.
Some common issues are:
1. Different objectives. One party may need the financial value of the property and wish to force a sale, while another may have sentimental or financial reasons for keeping it. Where the parties cannot reach an amicable agreement, it can have a lasting impact on their relationship as well as on their finances.
2. Disagreements on maintenance. Particularly in the case of property, costs will be incurred by the joint owners in cleaning, heating and otherwise maintaining the property to an adequate standard so as not to negatively affect its condition or value. Agreeing the apportionment of these costs can be challenging, particularly if one party chooses to inhabit the property while the other lives elsewhere.
3. Defining an exit strategy. If one co-owner wishes to liquidate their share by selling the asset, but the other(s) do not, it can be a complicated matter to agree on an exit strategy. Disputes can easily arise and breakdowns in communication can give rise to further disagreements in the future.
What to do if you jointly inherit an asset
If you jointly inherit an asset and wish to avoid the pitfalls detailed above, you should consider taking the following steps:
1. Consult a family law attorney such as Lewis & Matthews, P.C. Your attorney will help you to understand your rights and responsibilities, to draft co-ownership agreements, handle the tax implications of the inheritance and support any dispute resolution measures that are necessary to reach an amicable agreement on the management of the asset.
2. Attend mediation sessions. Where disputes arise that cannot be settled informally, seeking the support of a trained mediator can prove highly beneficial, creating a safe space in which all parties are guided to a satisfactory resolution.
3. Take legal action. If an amicable agreement cannot be reached, it may be necessary to petition the court to enact partition action . This is the legal process by which the sale of the asset is forced with the sale price then split between the co-owners based on their percentage ownership value of the asset.
In conclusion, jointly inheriting an asset can quickly become a burden, particularly when co-owners have different opinions and desires for managing it. For support in overcoming the challenges of joint ownership, consult Lewis & Matthews, P.C. Our dedicated and experienced team will handle your case with the compassion and professionalism that it deserves, helping you to reach an amicable outcome that satisfies your desires and safeguards your personal relationships.