Considerations in United States Property Ownership

Cross-border estate planning gets complicated fast when a client owns assets in the United States, and the culprit is often hiding in plain sight: how title is held and which state’s law applies. In the US, ownership labels that sound deceptively similar—joint tenancy, tenancy in common, tenancy by the entirety, community property, even contract-based transfers like POD/TOD—can produce dramatically different outcomes at death: who inherits, whether probate is required, and whether creditors, expenses, and taxes can reach the asset.

Chapman partner and Trusts and Estates Department leader Rebecca Wallenfelsz and associate Mackenzie Collins break down the details in a chapter entitled “Considerations in United States Property Ownership,” published in third edition of A Guide to International Estate Planning: Design, Administration, and Compliance. This chapter provides a practical roadmap for multinational planners who need to translate US ownership mechanics into clear planning decisions. The authors explain how common title structures and beneficiary designations actually function in real administration, highlight where state-law variation can upend expectations, and flag “gotchas” that routinely derail otherwise sound plans, especially when clients move between jurisdictions or hold different asset types in different states.

Introduction

This chapter aims to give a multinational planner an overview of the different ways in which property may be owned by individuals in the United States and the impact the ownership structure and applicable state law will have on the property at death.

In the United States, title to property (i.e., the registration of ownership) and the jurisdiction of the property (i.e., the state law that applies to the property) will dictate how the property is collected at death, who is entitled to receive the property, and whether the property will contribute toward a deceased owner’s final debts, expenses, and taxes. This chapter discusses how title may be held by individuals and the basic considerations to ensure the efficient transfer of assets upon that individual’s death to account for their wishes, potential tax implications, and other complexities, such as paying for the deceased owner’s final debts, expenses, and taxes. This chapter does not discuss the use of trusts in the United States or assets titled in or owned by a trust.

Individual Ownership

When title to an asset, whether US real estate, personal property, or a US financial account, is solely in the name of only one individual, the individual may freely dispose of that asset at death, subject to state law rights that may be granted to a surviving spouse and, in some jurisdictions, dependent children. One notable exception is property acquired in the name of only one spouse during marriage in a community property state in the United States. In that instance, the named individual may only dispose of their one-half (1/2) share of the community property. See the further discussion of community property below.

When an individual passes away owning assets in their individual name, typically a probate court proceeding is required. A probate court proceeding involves the appointment of a representative (who also may be referred to as an executor or administrator), who will: (1) collect the assets, which creates the “estate,” (2) pay the decedent’s final debts, expenses, taxes, and other creditors from the estate, and (3) distribute the estate to the beneficiaries. The beneficiary(ies) of the assets are the persons named in the individual’s will. A will may also specify how, or from what assets, the expenses, taxes, and other creditor claims are paid. State law varies as to whether, and to what extent, assets that are not part of this probate process (referred to as assets passing outside of probate) contribute toward the payment of the decedent’s final debts, expenses, and taxes. In the absence of a will, the law of the jurisdiction where the individual was domiciled at death will determine who are the beneficiaries or heirs (referred to as intestate succession in the United States) and what assets are subject to or contribute toward payment of the decedent’s final debts, expenses, and taxes, subject to certain exceptions with respect to real estate; provided, however, that real estate the decedent owned in another state will be subject to the laws of the jurisdiction where the property is located.

Each US state has laws that protect a surviving spouse, and some laws may protect dependent children as well. If the individual resided in a noncommunity property or common law state, the state may give the surviving spouse or dependent children the right to make claims for certain types of assets or property (retirement assets, primary residence, or personal property) or claims for a certain amount. This process of protection for a spouse or dependent child often places them in the status of being a creditor or claimant against the decedent’s estate.¹ If the individual resided in a community property jurisdiction and the property in question is treated as community property, the spouse will be entitled to a share of the community property (as discussed further below).

Multi-Owner and Split Forms of Ownership

Co-Ownership Arrangements

Co-ownership arrangements in the United States are typically referred to as co-tenancy and occur when the ownership of property is held by two or more individuals, trusts, or entities. This section covers the variations of co-tenancy arrangements under US law and the impact each type of co-tenancy has on the distribution of that asset at death.

• Tenancy in Common: Tenancy in common is the most rudimentary form of co-tenancy. Each co-owner or co-tenant owns a separate and distinct share of property, which is presumed equal but may be unequal if so specified.² All owners or tenants share a single right to possession of the entire interest, and state and local laws, or even co-tenancy agreements, will provide rules regarding what the co-tenants owe each other.³ Tenancies in common can apply to various types of property, including land, buildings, minerals, personalty, or financial accounts.⁴ Account agreements with financial institutions may have contractual terms regarding a co-owner or co-tenant’s rights for a tenancy in common account.

Under the law of most US jurisdictions, a tenancy in common is created whenever there are two or more owners of property and no express language is needed to create a tenancy in common. Owners of tenancies in common do not have automatic rights of survivorship of a deceased cotenant’s interest.⁵ Rather, the deceased cotenant may transfer their interest in the property independently of other tenants. In the absence of a beneficiary designation (see the further discussion below), the deceased cotenant’s interest will be part of the probate proceeding and subject to distribution and payment based on the terms of the deceased owner’s will or, in the absence of a will, the applicable state intestate succession rules.

Due to the lack of intention needed to create a tenancy in common, tenancies in common can be created inadvertently.⁶ One of the more common instances of an inadvertent tenancy in common is when a divorce severs a tenancy by the entirety (discussed below) or tenants in community property, or a joint tenancy (discussed below) is severed by the actions of a joint owner.⁷

• Joint Tenancy: While most jurisdictions in the United States will presume that property held by two or more owners creates a tenancy in common, for individual co-owners, the relationship of the parties (i.e., as spouses), the manner in which title was created, and express language can overcome that presumption and create a joint tenancy instead. The two key attributes of joint tenancy vs. tenancy in common are that (1) joint tenants are all equal co-owners and (2) there is a right of survivorship.⁸ Joint tenancy is also commonly referred to as joint tenancy with rights of survivorship (JTWROS). As evidenced by the name, in joint tenancy, co-owners do not have the automatic right to transfer their interest in the property. Instead, a deceased co-owner’s interest passes by operation of law to the surviving owner(s). Note, however, that, depending on state law, a joint tenancy may be severed (as discussed below).

To create a joint tenancy, evidence that co-owners intended to include rights of survivorship is required. However, the language required to demonstrate this intent varies from state to state. Some states simply require references to holding property “jointly” or “as joint tenants” or “in joint tenancy.” In other states, express reference to survivorship is necessary. Still other states do not recognize joint tenancy at all but may have case law that provides guidance on how to handle these situations.⁹ Typically, if a joint tenancy is not created, the result is a tenancy in common. Despite tenancy in common being the presumptive form of co-tenancy under state law, many banking and financial institutions employ a presumption that an account opened by a married couple, or even by any two individuals, creates a joint tenancy, where available.

Where a joint tenancy is created, the unilateral act of one co-owner may sever the joint tenancy.¹⁰ Similar to the creation of a joint tenancy, the co-owner who initiates the severance must take a legally sufficient step to demonstrate their clear intent to sever the joint tenancy.¹¹ While many jurisdictions historically did not require joint tenancy property to contribute toward the payment of a decedent’s final debts, expenses, or taxes, some jurisdictions have shifted away from this position to create an equitable apportionment or contribution rule. Nonetheless, equitable apportionment is still subject to any direction or statement made by the decedent in a will, or in a trust that is a will substitute, that provides a contrary direction on the source of payment.¹²

Multinational planners and advisors need to be diligent in reviewing the express language in titles as well as the account agreement or similar records for their client’s US bank or other financial institution accounts, in addition to any specific state laws that may govern co-ownership. Planners also need to be aware of the consequences of transfers between spouses that can occur when spouses create a joint tenancy, if one spouse is not a US citizen.

• Tenancy by the Entirety: Tenancy by the entirety is a form of joint tenancy with survivorship that only applies to married individuals. Tenancy by the entirety is state specific, often with little to no consistency between states. Some states do not recognize tenancy by the entirety at all.¹³ Some states, such as Illinois, only recognize tenancy by the entirety for a married couple’s primary residence. Still other states, such as Florida, permit tenancy by the entirety with any property.

While tenancy by the entirety may look different depending on the applicable state law, certain key attributes are present in most states. Those attributes include: a couple must be legally married, each spouse is treated as owning an undivided interest in the property, the creditors of one spouse are unable to reach the property, and severance may only occur with the consent of both spouses or by termination of the marriage.¹⁴

Creation of tenancy by the entirety also differs by state. Some states have a presumption that any conveyance to a married couple creates a tenancy by the entirety. Other states require very specific language to show a clear intent to create a tenancy by the entirety.

As with joint tenancy property historically, property that is owned in a tenancy by the entirety may not be subject to the payment of a decedent’s final debts, expenses, or taxes. While the trend in state laws is to adopt equitable apportionment rules that allocate certain debts, expenses, or taxes to joint tenancy property, because creditors of one spouse are unable to reach tenancy by the entirety property during life, certain debts or expenses may not be allocated to tenancy by the entirety property even under equitable apportionment.¹⁵

Multinational planners must be vigilant in asking questions about how a married couple holds title to property in the United States. As noted above, planners also need to be aware of the consequences of transfers between spouses that can also occur when spouses create a tenancy by the entirety, if one spouse is not a US citizen.

Community Property

Community property is a legal system based on the idea that spouses should be treated as equal financial partners for the duration of the marriage. Under community property laws, both spouses generally acquire a present, vested, one-half interest in all property that is acquired during the marital relationship.¹⁶ Community property is recognized in ten states in the United States. The nine US states traditionally classified as community property states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.¹⁷ Additionally, Alaska has adopted an elective form of the community property system.¹⁸

Under the laws of most community property jurisdictions, any property owned or acquired prior to the marriage is referred to as “separate” property and any property acquired during the marriage is “community” property,¹⁹ with some exceptions applying, typically for property that is received as a gift or inheritance during marriage. In general, the community property status of property is created by operation of law. While spouses may agree to a property arrangement other than what is provided by community property laws in some jurisdictions, spouses are presumed to have consented to the community property statutes of the state in which they reside or in which their property is located.

Planning becomes more complex when a married couple moves from a community property state to a noncommunity property or common law state. Courts generally apply the law of the situs of property (particularly real estate), regardless of the marital domicile, often resulting in some assets of the couple being considered community property despite the fact that the couple is living in a common law state.²⁰ Additional complexities may arise if, after a couple moves from a community property state to a common law state, the property in question is exchanged for new property. Typically, the character of the original property attaches to the funds that are likely later used to acquire a new property. This means that, if the common law state recognized the community property rights in the original property, it will trace the character of the source of funds used to purchase or acquire the new property, resulting in a couple having the same marital interest in the property as they had in the funds used to acquire the property.²¹

Generally, in a community property state in the United States, each spouse is entitled to his or her separate property and one-half of the community property upon the death of the first spouse.²² The deceased spouse is free to dispose of his or her own separate property and one-half of all community property. In other words, a decedent’s one-half of the community property does not automatically pass to the surviving spouse. Rather, its disposition is governed by either title of the community property (in joint tenancy or community property with right of survivorship), by beneficiary designation or the deceased spouse’s own estate plan, or, in the absence of either of those methods, by the rules of intestate succession.

It is crucial for multinational planners to understand that different countries and community property systems may produce divergent results.²³ For example, in certain foreign jurisdictions, all property, regardless of how it is acquired after marriage, is treated as community property. In each US state that recognizes community property, there are exceptions to community property treatment for certain types of property acquired during marriage, such as property that is inherited or received as a gift during the marriage. Consequently, the multinational estate planner must carefully examine both the definitions of community property and the conflicts of law provisions of any US community property state in which a client seeks to own property in order to avoid results contrary to the client’s intent.

Usufruct

A usufruct is the right to use and enjoy and receive the profits of property that belongs to another person in civil law jurisdictions.²⁴ The person who has the usufruct interest must maintain the property and not cause damage to or diminish the property.²⁵ A usufruct interest is created when the owner of property grants another person the right to possess and enjoy the use of the property for a fixed time, for the life of the person enjoying the use of the property, or at the will of the owner of the property.²⁶ When a usufruct is created, no estate passes from the owner of the property; therefore, the holder of the usufruct cannot convey the usufruct interest nor may they dispose of the property.²⁷ The usufruct interest terminates when the period granted by the owner of the property expires.²⁸ Apart from in the state of Louisiana, whose legal system is based in civil law, usufructs are rare in the United States.²⁹

Life Estates

A life estate is a form of split ownership that gives an individual (or a succession of individuals) the right to use or possess property for the duration of that individual’s life.³⁰ At the end of the life estate, the remaining property becomes the sole property of another person or entity. Life estates are typically created by the language of a deed or a will, or by circumstances contemplated by state statute, with the interest of the life estate and who receives the remainder both specified.³¹ During the life estate, the person granted the life estate has the right to the full benefit, use, and profits of the property.³² Similar to usufructs, someone with a life estate must maintain the property and protect the property for future use and enjoyment of the person or entity who will receive the remainder of the property.³³ Life estates are much more common in the United States due to their history rooted in common law, which is much more prevalent than civil law in the United States. The multinational planner should examine the exact interest their client holds in an asset so as not to plan or dispose of an asset that their client has a legal obligation to protect and cannot dispose or transfer.

Contracts/Beneficiary Designations

Thus far, this chapter has focused on property ownership—what a person owns and the impact that ownership has on distribution and transfer at death. Because of the testamentary freedom typically associated with US assets, for certain property clients may be able to specify a beneficiary in contracts and beneficiary designations to dispose of that particular property at death. Contracts and beneficiary designations operate outside of intentions expressed in a will or in a trust that is being used as a will substitute. Instead, property subject to these contracts or beneficiary designations is transferred directly to a named beneficiary(ies) at the death of the owner(s). Therefore, beneficiary designations must be carefully considered alongside any other estate planning documents to ensure they work in tandem.

Transfer on Death Instruments

Transfer on death instruments (TODI), including transfer on death deeds, allow an individual who owns the property in his or her name to name or designate one or more individuals or entities as beneficiaries to receive the property upon the death of that current owner. The benefit of the TODI is that it bypasses the probate proceeding (property passes outside of probate) and allows the named beneficiary to collect or step into ownership of the asset at the death of the owner. These instruments are flexible tools in that they are revocable and can evolve with an estate plan.

While TODIs can simplify the transfer of assets in certain situations, they are not without complications. A multinational planner must consider the consequences of using a TODI when there are multiple beneficiaries and the property requires upkeep. Unlike a will or trust, the way in which property can be used or how expenses, debts, or taxes are going to be paid cannot be spelled out in the TODI.³⁴ Additionally, the property subject to the TODI will be distributed according to the TODI or any default rules associated with the TODI under state law, regardless of what may be stated in the owner’s will and/or trust.

While there is some commonality among TODI statutes, they do vary widely on how the instruments are put into place. Moreover, not all US states recognize or permit TODIs for real estate. States that do recognize TODIs vary on several factors, including “execution and revocation, the effects if there are co-tenants, implications for homestead and anti-lapse, and determining whether a trust can be a beneficiary.”³⁵

Payable on Death Accounts

A payable on death account (POD) is a type of financial account that allows the account holder to name one or more beneficiaries (equally or unequally) to receive the funds of the account upon the account holder’s death. Similar to a TODI, discussed above, POD accounts may simplify the transfer of assets upon a client’s death. However, these accounts may prove more complex than expected. Depending on a client’s situation, the simplicity of these accounts can be a positive or a negative. The beneficiary designation forms used for these accounts are often quite simple, allowing the individual owner to name one or more persons as beneficiaries and possibly specify different percentages to each person. However, the forms may not account for, or readily address, a situation where one of those named beneficiaries dies before the owner of the account. Boilerplate language in the account agreement may dictate how an account is distributed if a named beneficiary dies before the account owner. Similar to a TODI, these beneficiary designations determine distribution of the account regardless of the terms of the account owner’s will and/or trust. Moreover, state law varies greatly as to whether the beneficiaries who receive POD account assets are responsible for contributing toward payment of debts and taxes of the deceased account owner.

Because POD accounts are set up with financial institutions, it is crucial that multinational planners are familiar with the financial institution’s policies with regard to these accounts to determine if and when these accounts may make sense for clients.

Life Insurance

Life insurance is a contract between an insurance company and an individual or trust whereby the insurer agrees to pay a designated beneficiary a sum of money upon the death of the insured. Life insurance can be an extremely useful estate planning tool, specifically to provide liquidity after a decedent’s death to pay unpaid medical bills, funeral expenses, and final income taxes and to provide for a surviving spouse or child(ren). Because there are so many parties in a life insurance transaction—the insurance company, the policyholder, the insured, the designated beneficiary—a lot of planning can be undertaken, particularly with the policyholder and designated beneficiary. Both the policyholder and designated beneficiary may be trusts or individuals in the United States. Similar to a TODI or POD account, discussed above, the beneficiary designations on life insurance policies will control regardless of any statement or provision made in the insured’s will or trust.

It is crucial for the multinational planner to consider any and all life insurance policies their client may have to ensure the beneficiary designations reflect the client’s current wishes and the proceeds are taken into account in the client’s overall estate planning picture.

Retirement Accounts

In the United States, retirement accounts take many forms but can largely be put into one of two general categories: personal retirement accounts and pension plans.

• Personal Retirement Accounts: A personal retirement account in the United States is essentially a retirement savings account owned by an individual. The two most common forms of these accounts are 401(k)s, which are available to individuals through their employer, and individual retirement accounts (IRAs), which are available to any individual who receives a salary and can be set up with any financial institution that offers an IRA.

While only the individual who created the personal retirement account can be the owner of the personal retirement account during the owner’s life, the owner may designate or name an individual, trust, or entity as beneficiary of the personal retirement account. These beneficiary designations supersede all other estate planning documents. However, federal law protects the interest of a spouse in 401(k)s and similar qualified personal retirement plans by requiring that a surviving spouse is the default beneficiary, and at least one-half of the retirement plan must be paid to the surviving spouse unless the surviving spouse consents in writing otherwise.³⁶ This federal law does not apply to IRAs.

Individual retirement accounts payable to a named beneficiary are generally not required to contribute toward a deceased owner’s final debts and expenses, but they may contribute toward death, inheritance, or estate taxes that are attributable to the retirement plan.³⁷

It is crucial for the multinational estate planner to inquire as to a client’s ownership of any such account and to ensure the beneficiary designation works with a client’s overall estate plan. These accounts can be overlooked by clients when they change jobs or cease making contributions, but the accounts may have significant value and, when overlooked, an outdated beneficiary designation.

• Pension Plans: Pension plans are created as private contracts between employers and employees and their terms can vary widely. Some pension plans offer a retired employee a lump sum payout option, while others provide periodic payments to an employee, or to the employee and their spouse, after the employee’s retirement, for a term of years or for life. The amount of the payment is determined by many factors, including an employee’s salary history, years of service, and age at retirement. These pensions are intended to provide an employee with financial support during retirement.

Because pension plans are private contracts between employers and employees, tax laws are generally the only source of standard terms, and these terms are typically focused on contribution and management. The factors and prerequisites that determine the value of pension payments, when an employee vests in a pension plan, and what distribution options the employee has at retirement may all differ.

A multinational estate planner should inquire about the client’s right to any benefit of this kind, keeping in mind that the payout option and beneficiary distribution may not be flexible. Moreover, pension distributions may terminate at the death of the employee, or at the death of the last to die of the employee and their spouse.

Conclusion

In many ways, each US state is a country unto itself with respect to ownership of property, distribution at death, and contribution of property toward payment of a decedent’s final debts, expenses, and taxes.³⁸ As a result, the state domicile of a client and the situs of their assets become important considerations, in addition to title and ownership. Federal law typically only comes into play for certain tax-qualified retirement benefits. While all US states follow the general maxim that individuals are free to direct the ownership and distribution of assets at death, state laws can vary greatly in the protections provided to a surviving spouse (or to the individual recognized as the surviving spouse regardless of the formality of marriage), as discussed above.

The foregoing means that a multinational planner will need to have details on the type of assets and how title or ownership is registered, and may need to determine the US jurisdiction that governs the property, as well as determine whether existing assets have beneficiary designations in place, in order to understand the process for collecting the asset at death (who collects the asset), who receives or inherits the asset, and whether or not the asset must contribute toward the payment of the decedent’s debts, expenses, and taxes.

1. Naomi Cahn, What’s Wrong About the Elective Share “Right”?, 53 U.C. Davis L.J. 2087 (2020).
2. 7 Powell on Real Property § 50.02[5].
3. 7 Powell on Real Property § 50.01[1].
4. Id.
5. Id.
6. 7 Powell on Real Property §§ 50.02[3a], 50.02[3b].
7. 7 Powell on Real Property § 50.02[3a].
8. 7 Powell on Real Property § 51.02[1].
9. 7 Powell on Real Property § 51.02[2].
10. 7 Powell on Real Property § 51.04[1a].
11. Id.
12. Charles F. Noren, Liability of Surviving Joint Tenant for Debts of Deceased Joint Owner, 40 Neb. L.R., 153 (1960); Wendy C. Gerzog, Equitable Apportionment: Recent Cases and Continuing Trends, 41 Real Prop., Prob. and Tr. J. 671 (2007).
13. 7 Powell on Real Property § 52.01[3].
14. 7 Powell on Real Property § 52.01[1].
15. See footnote 12, supra.
16. 7 Powell on Real Property § 53.01[1].
17. 7 Powell on Real Property § 53.01[3].
18. Robert C. Lawrence III and Elisa Shevlin Rizzo, A Guide to International Estate Planning, p. 88 (American Bar Association, 2d ed., 2014).
19. Id.
20. Id.
21. Id.
22. 4 Thompson on Real Property, Thomas Editions § 37.14(b).
23. Lawrence and Rizzo, supra note.
24. 31 C.J.S. Estates § 2.
25. Id.
26. Id.
27. Id.
28. Id.
29. Suzanne Shier, Of Counsel, Levenfeld Pearlstein, LLC, Are You Common or Are You Civil? (Mar. 7, 2024).
30. 28 Am. Jur. 2d Estates § 56.
31. 2 Powell on Real Property § 15.01.
32. 28 Am. Jur. 2d Estates § 58.
33. Id.
34. Ashlea Ebeling, When Leaving the House to Your Heirs Backfires, Wall Street Journal, May 10, 2025, https://www.wsj.com/personal-finance/house-inheritance-transfer-on-death-deed-aa10fc82.
35. 3 Powell on Real Property § 25.01 (2025).
36. 29 U.S. Code § 1055.
37. Maurice T. Brunner, Ultimate Burden of Estate Tax in Absence of Statute, Will or Other Provision, 68 A.L.R. 3d 714.
38. Shier, supra note.

© 2026. Published in A Guide to International Estate Planning: Design, Administration, and Compliance, Third Edition by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.

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