An entrepreneur I represent recently closed on a commercial building in Manhattan. As we reviewed the closing documents, she pointed to the deed. “It says I’m taking title in ‘tenancy in severalty.’ What does that mean for my business? For my family?”
It’s a foundational question. The language on a deed isn’t just boilerplate—it dictates control during your lifetime and, critically, determines what happens to the property after your death. The term “tenancy in severalty” sounds complex, but the root word gives it away: sever. This form of ownership is severed from all others. It means there is only one owner.
That single owner can be an individual, a corporation, an LLC, or a trust. But there is always only one. This clarity is its strength, but it also carries significant implications for your estate plan that must be handled with intention.
Sole Ownership vs. Joint Ownership
Most people are more familiar with joint ownership structures. A married couple often buys a home as “tenants by the entirety.” Business partners might hold a property as “joint tenants with rights of survivorship” or as “tenants in common.” Each of these creates a web of shared rights and responsibilities.
Tenancy in severalty is the opposite. It is the cleanest form of ownership, providing the title holder with absolute control. The sole owner can sell, mortgage, or transfer the property without needing anyone else’s consent. For a single individual, a trust, or a business entity, this is often the most straightforward and logical way to hold real estate.
However, this absolute control has a trade-off. Unlike joint tenancy with rights of survivorship—where the property automatically passes to the surviving owner upon death—an asset held in severalty does not bypass the probate process. This is a crucial distinction for anyone engaged in generational planning.
Probate, Property, and Prudent Planning
When the sole owner of a property passes away, that real estate becomes part of their probate estate. The property is now under the jurisdiction of the New York Surrogate’s Court. Its distribution will be governed by the terms of the deceased’s will. If there is no will, the property will pass according to the state’s intestacy laws.
For example, under New York’s Estates, Powers and Trusts Law (EPTL) § 4-1.1, if a person dies without a will and is survived by a spouse and children, the spouse inherits the first $50,000 of the estate plus half of the remainder, with the children inheriting the rest. This statutory formula may not reflect the decedent’s actual wishes for a specific property. The probate process itself can be lengthy and public, a situation most of my clients prefer to avoid for their families.
This is where deliberate estate planning becomes essential. Holding title in severalty is not an oversight; it’s a starting point. The key is to have a structure in place that anticipates the probate process.
Using Trusts for Seamless Stewardship
For many of my clients who own property in their own name, the goal is to maintain control during their lifetime while ensuring a seamless transition to their heirs. A revocable living trust is often the most effective instrument for achieving this.
Here’s how it works: We can retitle a property currently held in tenancy in severalty by the individual into the name of their trust. The individual, as the trustee, retains complete control over the property. They can still manage it, sell it, or refinance it as they see fit. The only change is the name on the deed.
Upon their passing, however, the property is not part of their personal probate estate. It is owned by the trust. The successor trustee—whom the client has already chosen—can then manage or distribute the property according to the clear instructions left in the trust document. This avoids the time, expense, and public nature of Surrogate’s Court proceedings, turning a potential legal headache into a simple administrative task.
Stewardship. It’s about ensuring the assets you’ve worked a lifetime to acquire serve your family’s future, not the court’s calendar.
If you own real estate as a sole owner, the next prudent step is to review the deed itself. We can examine how your property is titled to confirm it aligns with your estate plan, rather than creating future complications for your family.
