In New Mexico, does a deed have to specify how multiple people own title?
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Answer:
In New Mexico, property can be owned as separate property (one owner), community property (husband and wife ownership), in joint tenancy, or as tenancy in common (each with multiple owners).
Joint tenancy comes into being, or is created, by a specific act of the parties involved. For example, real estate held in this fashion is typically the result of a property transfer by deed. Each joint tenant owns an equal share of co-owned property. When the first joint-tenant dies, the title designation transfers the property immediately and automatically to the surviving joint tenant. This ownership arrangement is said to be a will substitute because it eliminates probate of this particular asset. Avoiding probate does not mean the property will not be included in the taxable estate of the first co-owner to die, or that state and a federal gift and estate taxes will be avoided. Estate planning experts feel joint tenancy is a poor method of planning property transfer for two reasons. First, each co-owner has given up the right to leave the property to anyone other than the other co-owner. Circumstances may change and either tenant may later want to leave the asset to someone else. Either party can usually dissolve a joint tenancy during life, but this may not always be possible or practical. Second, where taxes are an important consideration in planning an estate, holding assets in joint tenancy does not permit
one joint tenant to leave their share of the assets in such a way as to save taxes. Upon the death of the first joint tenant, the asset goes outright to the survivor. This causes the survivor’s taxable income and taxable estate to be increased.
Careful consideration should be given to the tax consequences of dissolving existing joint tenancies because additional gift and estate tax obligations may be created. Tax implications should be fully explored with tax experts before changes are made and, particularly, before new joint tenancies are created.
Joint tenancy with the right of survivorship reflects the desire of many husbands and wives to
hold title to property in a way that the survivorship characteristic prevails. When either dies,
they each want the surviving spouse to acquire full ownership in the property and to do so with a minimum of time, trouble, and red tape. Thus, they take or hold title to property as “Joint Tenants and to the Survivor.”
A 1985 revision of New Mexico statutes states “property acquired by a husband and wife by an
instrument in writing, whether as tenants in common, as joint tenants or otherwise, will be presumed to be held as community property unless such property is separate property.” This means property owned as joint tenants by a husband and wife is considered as community property by New Mexico law.
Tenancy in common is another form of co-ownership of property that can exist between any two or more persons. Tenancy in common can be created by deed, will, or by law.
Tenants in common, like joint tenants, must act together to decide how they are going to enjoy and use the property. Problems about the management and improvement of the property, and how the income stream is to be divided, can exist. A distinguishing characteristic is that there is no right of survivorship. Each tenant can dispose of their separate and distinct, yet undesignated, interest in the property in any way they choose.
Each co-owner can sell it or give it away. They can direct its eventual disposition by last will
and testament, or they can ignore the problem. Each co-owner’s property will be distributed,
when they die, according to the law of property descent and distribution. Several of the more important characteristics of a tenancy in common are:
1. Each tenant in common has the power to dispose of their separate and distinct, yet undesignated interest, in whatever property is involved, any way they choose.
2. When a co-owner dies, their interest does not pass to the surviving tenant-in-common. It
passes to the surviving co-owner spouse, or to some other person or party, but only if the
property owner so indicates his wishes in his last will and testament. Otherwise, the property
passes according to the law of property descent and distribution.
3. When a co-owner dies, any property owned in this fashion becomes a part of the probate estate, and passes under the supervision of probate court.
4. Only the partial interest owned by the property owner is included in his estate. Hence, only the partial interest owned by him is subject to state and federal estate taxes.
Generally, for transfers to two or more persons who are not husband and wife, the deed or conveyance must expressly state an intention to create a joint tenancy by noting that the property will be held not as tenants in common but as joint tenants with rights of survivorship. Joint tenancy property passes outside of probate, however, it may be severed so that the property becomes part of one person's estate and passes to that person's heirs.
Without that express language in the deed, it may be construed that tenancy in common was created in the deed.
