Not all of your property may be probate property. In other words, your will may not control all of your property. One example of non-probate property is jointly-owned property. Because the different types of jointly- owned property are treated differently for probate purposes, it is important to know what type of jointly-owned property you have.
Title to property is equivalent to ownership. If property is titled only in your name, you are the sole owner. If property is titled in more than one name, it is jointly-owned property. In South Dakota, the most common types of jointly-owned property are joint tenancy with the right of survivorship and tenancy in common.
If you obtained real estate in South Dakota during your marriage, your property is most likely owned as a joint tenancy with the right of survivorship. Under a joint tenancy with the right of survivorship, each owner effectively owns the whole asset. In other words, each owner shares ownership equally. If one owner dies, the other owner acquires the deceased owner’s interest automatically.
If you own real estate in South Dakota with someone other than your spouse, you usually have a tenancy in common. Under a tenancy in common, each owner holds his share of the asset outright. Under this ownership structure, there is no need for there to be “equality.” For example, you might own 60%, and your brother would then own 40%. If your brother dies, his interest in the property will be distributed in accordance with the directions in his will. In other words, your brother’s interest does not pass automatically to you as the remaining tenant in common.
You may also own bank accounts with another person. Similar to real estate, most married couples have a joint account with the right of survivorship. During your lifetime, the other joint owner can access the account. At your death, your will does not control this joint account and the entire account will belong to the surviving joint tenant.
Under some circumstances, you may not want to give another person access to your bank account during your lifetime, but you do want that account to go to a designated person at your death. By naming a beneficiary in this way, the designated beneficiary will get the account’s funds at your death no matter what your will says.
You may also own stocks or bonds jointly. Once again, if you own stock jointly with right of survivorship, it passes automatically at your death to the surviving joint tenant and does not transfer under your will. On the other hand, if your stock is owned jointly with another person as tenants in common, your share or interest in the stock will pass under your will.
Finally, there are some assets that allow you to designate a death beneficiary. Today, many South Dakotans have some type of life insurance or retirement plan. Most life insurance policies and retirement plans allow you to designate a death beneficiary. These arrangements are contracts that provide how the benefits will pass at your death. These benefits do not become part of your probate estate (unless you name your estate as the beneficiary).