In many American families, the house where people live is the biggest asset the family owns. Even if you have other valuable belongings, your home may have substantial emotional value to you and other people in your family.
Obviously, you want to ensure that you can smoothly pass the ownership of your house on to the next generation. Typically, real estate has to pass through probate court as part of someone’s estate when they die. However, there are certain estate planning strategies that could allow your loved ones to inherit the house without waiting for probate proceedings.
Consider changing the way that you hold title
The way that the state records your name and the name of any co-owners of facts ownership and inheritance rights. Many people have very simple vesting language that simply uses their full legal name. However, you can hold title in numerous manners, some of which can be useful when estate planning.
If you live full-time with a child or romantic partner whom you want to inherit your property when you die, you can execute a deed so that you hold title as joint tenants with rights of survivorship. When one of the joint tenants dies, their property rights pass to the other individual on title, thereby keeping the house out of probate court.
Create a trust to hold the title to your property
Many people use trusts as part of their estate plans to limit their probate risks. Typically, property owned by a trust and not by an individual is not subject to probate oversight when a person dies.
If you transfer the title of your property over to a trust, that will allow for a smooth and quick transition of ownership after you die. You also have the option of controlling what happens to the property in the long term. You could grant someone tenancy without giving them ownership. That approach could allow you to donate the property to a historical preservation charity or to pass it on to the next generation of your family when the tenant dies.
Understanding the different ways to handle your home in your estate plan can help you choose the best strategy for your needs.