In New York, laws for inheritance of property are clear with how children should inherit a deceased parent’s property, but what if the property is owned by two unmarried people? This can complicate inheritance, especially if there is no will to determine the beneficiaries and the assets are not put into a trust. Below is a real-world case showing the outcome of an attempt at fraud in a family joint ownership of a house, which could happen to anyone, followed by how to prevent this from happening, and what to do if you find yourself in such a situation.
A Real-World Example
In this case, there was a brother and sister who bought a property in New York together in 1968. In the deed, there was no right of survivorship language included. After the brother died without a will or descendants, the sister got married to her second husband in 1994. She had two children from her first marriage. Afterwards, the sister died in 2019, and her husband re-recorded the deed in his name only in 2023. There was neither a filing of this property to the surrogate court nor a will written. So, was the sister’s husband entitled to her and her brother’s share without any share being given to the children from the first marriage?
In New York, if two unmarried people purchase a house and both their names are on the deed, but there is no right of survivorship language on the deed, then legally, they own it as tenants in common. This means that the two people each own 50% of the property, and when one of the owners is deceased, their portion goes to their beneficiaries as outlined by NYS law or by their will. In this case, when the brother died without any descendants, his portion did go to his sister by New York State’s intestacy laws, leading her to own 100% of the property.
However, when the sister died, her husband did not automatically inherit the entire property. In order for the sister’s husband to obtain legal ownership of the whole property, there would either have to be a will to transfer that share to the sister or her husband, and the husband would have to go through the Surrogate’s Court to obtain legal ownership of the property. Because there was no will nor right of survivorship language on the deed, the husband had unlawfully registered the deed to only his name after the death of the sister and the property would need to be distributed by NYS intestacy laws: the husband was entitled to 50% of the house from the deceased sister’s share, but regarding the deceased brother’s share, the husband was entitled to $50,000 plus 50% of the estate, with the remaining 50% belonging to the children from the first marriage.
Other Types of Ownership Structures
As mentioned previously, being tenants in common means that the two people each own 50% of the property, and when one owner dies, their half of the property goes to their beneficiaries, not the other owner. This is in contrast to joint tenancy with right of survivorship, where both owners own the entirety of the property, and if one of the owners dies, the deceased owner's share would transfer to the living owner. For instance, if the sister and her husband had purchased the house together, they would have tenancy by the entirety, leading the husband to have sole legal ownership of the house when the sister died.
How to Prevent Complications with Family Joint Ownership of Assets
To avoid the complications caused by joint ownership of assets within a family, it is best to file a will in court to designate beneficiaries and put the house in a trust to minimize challenges to inheritance. Other steps that can be taken are to hire a third-party professional to help your family handle your assets and to make sure all record-keeping for the property is accurate and up-to-date.
Putting Property in a Trust to Minimize Challenges
The easiest way to protect your family's joint-owned property from fraud is to put it into a trust. A trust is a legal arrangement where one party (the trustor or grantor) transfers property to another party (the trustee) to manage and distribute for the benefit of a third party (the beneficiary). It acts as a separate legal entity that owns and manages assets according to the trustor's instructions.
A trust will allow you to designate who the property will go to directly after your death, as trusts bypass probate. This makes it clear who will inherit your property and will prevent any fraudulent claims to your property. Because of the legal protection, control, and privacy that a trust provides, it is highly recommended to have a trust for a property you want to protect from fraud. There are two types of trusts, irrevocable and revocable, so it is best to contact an attorney who can guide you on which type of trust you should have for your specific situation.
If in the above case, the sister had a trust for her property that indicated the beneficiaries for the property were her children, ownership would have directly gone to her children after her death, and the husband would not have been able to fraudulently put his name on the deed and exclude the children.
Filing a Will in Court to Designate Beneficiaries
Another method to prevent fraud is to have a valid, updated will that expresses your wishes for your property after your death. The benefits of a will are that the will can designate beneficiaries, distribute assets clearly, and can be adjusted to reflect changing wishes, but the drawbacks are that the will will have to go through probate, which is a lengthy process requiring the will go through Surrogate's Court to be deemed valid, and will have to adhere to the specific laws and standards for a will in New York in order to be valid. Even then, a will can be contested, further delaying the probate process.
A will would have been helpful in the above case. The sister died intestate, so the property was distributed according to the intestacy laws of New York State. However, this may not have reflected the sister’s wishes. What if she only wanted her children to have a certain portion of the property or did not want her husband to have any portion? A will would have clearly demonstrated the sister’s wishes and avoided the fraud that the husband committed.
Using a Third-Party Professional to Make Decisions
Hiring a neutral third-party professional, such as a mediator or estate attorney, can help resolve conflicts and prevent any one family member from controlling shared decisions. This can prevent conflicts from getting so heated to the point of fraud, as in the above example. The children did the right thing by contacting a trust and estate attorney to help them resolve their case.
Maintain Transparent Record-Keeping
Lastly, it is important to document all asset-related decisions and make sure that the entire family has access to them. This will ensure that nothing is hidden between family members, and those records can be reviewed if questions or disputes arise. Keeping transparent records is a simple yet powerful tool for protecting family assets and preventing disputes or fraud, especially when emotions or money are involved.
Looking Towards the Future
If you find yourself in a similar situation as above, it is important to stay calm and seek professional legal help. If you are concerned about fraud regarding family joint ownership of assets, it's important to consult with a professional. Please do not hesitate to contact the Law Office of Inna Fershteyn at (718) 333–2394 for help protecting your assets.