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that, when contemplating buying and owning an asset with another person, especially something valuable, they should consult an expert, such as an attorney or certified accountant to assure that risks are minimized, financial and tax benefits maximized, and their co-ownership relationship is compatible with their financial goals. Co-Ownership Formats. The manner in which you own property with another person is important because different ownership formats have have different consequences, which are discussed below. Basically, there are two ways you can own stuff with one or more person: Joint Tenancy. This is a form of ownership of an asset by two or more people who have an equal and undivided interest in the asset . That means they have an equal right to possession of the entire property. They can’t own different percentages. They also have a right of survivorship which means that if one joint tenant dies, their interest automatically transfers to the other joint tenant (s). Mortgaging or selling a property held in joint tenancy requires the consent of all of the joint tenants. Joint tenancy is commonly used by married people, and people who want to make sure that the other co-owner can immediately take full ownership of the asset if they die. Tenants-in-common. A tenancy-in-common is a shared ownership arrangement in which each holder has a distinct and separately transferable interest . For example, one person may own a 30% interest in a property, while another owns the other 70%. A tenant-in-common can sell or transfer their interest to someone else. There is no right of survivorship. That means when the tenant-in-common dies, their interest goes to whomever they directed it to go to in their will . In general, tenancy-in-common allows for more freedom and flexibility in ownership arrangements. Reflect on Learning: Which form of ownership allows a person to sell or transfer their interest without approval of the other co-owners? Answer: Tenancy-in-Common. What is a right of survivorship and which form has this? Answer: It is when one owner dies the interest automatically transfers to the other co-owners; Joint tenancy. PRODUCT PREVIEW Off to the Races! Steven Spielberg is a co-owner of a racehorse named Atswhatimtalkingabout, which came fourth in the 2003 Kentucky Derby. Fin Lit Trivia Fin Lit Trivia Fin Lit Trivia
II. How Co-ownership Happens Buddy-Buy. Buddy-buying an asset with a friend or family member is becoming more popular. Sharing ownership with another person is tempting. For one thing, it spreads cost among multiple people , making it easier to afford things. Not many people can afford to buy a home on their own, but by pooling their savings with one or more friends, they can more easily accumulate a down payment. Also, combined incomes make it more likely they’ll qualify for a mortgage . Some people like to buddy- buy and share “toys” like boats, expensive tech equipment, season tickets, or vacation homes.
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Co-Owner Bard The construction of the Globe Theater in London was so expensive it could only be accomplished through co-ownership and investment. Shakespeare owned a mere 12.5%
THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY 311
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