Keeping Your House Out of Probate
Avoiding Probate with Real Estate
The determination of whether real estate will go through probate is dependent on the wording of the deed.
If the deed is solely in your name, or in your name alongside another individual without any “magic words,” the property is considered probate property.
There are several strategies to keep real estate out of probate.
Survivorship Deed
If you wish to share full ownership with another person, such as your spouse, you can utilize a Survivorship Deed. This deed includes the essential phrase “to John Doe and Jane Doe for their joint lives, remainder to the survivor of them." Upon the passing of the first owner, the surviving tenant merely needs to file an affidavit regarding the deceased, and the title will transfer solely to the survivor.
However, exercise caution when using a Survivorship Deed, particularly if the co-owner is not your spouse. Keep in mind that the other individual has full ownership rights:
As co-owners, both parties must agree to sell the property. If you wish to sell but the other party does not, you may need to seek court intervention to obtain the right to sell. Additionally, if the co-owner consents but is facing marital issues, their soon-to-be ex-spouse will also need to agree to the sale, potentially giving them leverage.
If the co-owner encounters creditor issues, you might find that creditors could pursue your home to settle your co-owner's debts.
Transfer on Death Designation
If you prefer not to grant equal ownership rights to someone during your lifetime but want them to inherit the property after your death, you can file a Transfer on Death designation. This document states that you own the property and that upon your death, it will go to the specified individual(s). You can revoke or modify the beneficiary at any time. After your passing, the beneficiary only needs to file an affidavit, and the title will transfer to their name.
However, a Transfer on Death designation comes with its own challenges:
You can designate multiple beneficiaries, but this can complicate matters. There will not be a single person in charge if the property needs to be sold after your death. All beneficiaries must agree on the sales price and terms. If any beneficiaries are married, their spouses must also be involved in the agreement, which could be avoided by allowing the property to enter probate or by using a trust.
If you have multiple children and only name one as a beneficiary, that child has no legal obligation to share the property or sale proceeds with their siblings. While there may be a moral expectation to do so, legally, they are not required.
Additionally, be aware that a Transfer on Death designation does not protect the property from Medicaid recovery and may not shield it from creditors. The beneficiary must inform Medicaid authorities about your passing and the subsequent property transfer along with the affidavit.
Trust
If the property is owned by a Trust at the time of your death, it will not be subject to probate. This arrangement can also simplify the selling process, as the trustee has the authority to sell the property, determine the terms of sale, and sign the deed. Our office can effectively address any legal questions about probate. If you have any questions, please fill out the following form below and a probate lawyer from our office will get back to you.
