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Ways to Avoid Probate when you only own Real Estate
Probate is a thing you would want your loved ones to avoid. During death, a person’s estate can get in the hands of a probate court if the will is either missing or invalid. A will lists the last wishes of a person, and one of the areas affected at this time is real estate. If you have a family and other dependents, and real estate is the only property you have, you do not wish to lose it to unknown inheritors.
Real estate probate can take several weeks, or even years, depending on the value of the estate and the number of parties involved. Let us look at some of the steps you can follow to keep your real estate out of probate, especially your home:
Set Up a Living Trust
The easiest way to pass the real estate to your beneficiaries without probate is through a living trust. The person creating the trust, also known as the grantor, lists themselves as a trustee, and names a successor to manage the estate once the grantor dies.
In the trust, beneficiaries are also named. Once the grantor passes away, the property gets shared among the beneficiaries. Ensure that you understand the terms of estates before putting them in a trust. This is because you cannot refinance or sell the estate without permission from the beneficiary once you list them.
In the event of a divorce, ownership of the real estate may also be affected. Make arrangements with the beneficiaries to write a will highlighting what needs to be done should they pass away before you.
Joint Tenancy
If you are the only real estate owner, you can decide to add another tenant on the title deed of the property. In the event of death, the property is automatically inherited by the joint tenant. The inheritance procedure will keep the property out of probate.
Some states require that joint tenants share the real estate equally. For instance, if someone names their son in the joint tenancy, both of them are entitled to 50 percent of the estate. The only downside to this method is that the joint tenant receives the right to your estate while you are still alive.
Creating Life Estates
Life estates allow real estate owners to use and live in the property as long as they are alive. As soon as the life tenant passes on, the property is given to the listed remainder-man or beneficiary without getting to probate.
Life estates are common between parents and their children. The life tenants take care of the real estate and settle all expenses associated with it like tax and mortgage. However, once they name a beneficiary, they can neither sell nor transfer the property’s title unless allowed by the remainder-man.
Figure 1: Naming your children as life tenants is a good way of avoiding real estate probate
Transfer on Death
Several states allow real estate owners to get transfer on death deeds similar to what is provided by banks and investment accounts. The owner remains entitled to the property as long as they live. After passing away, the property is given to the individual named in the deed.
Avoiding Real Estate Probate using a Will
When a relative passes away, houses, land, and other real estate property are some of the times that people fight to inherit. Taking these properties to probate can become a huge issue, and people can continue fighting for years. Everyone gets the best lawyer to defend their interests to convince the judge that they are entitled to the property. Things become worse when the decedent left no will.
To avoid this, simply get in touch with a lawyer and ask them to assist you to draft a valid will. Keep some copies in different but safe places. Inform the beneficiaries of your plans. In case of any revisions, notify the involved parties as well as family members immediately. Reviews are important for young families who may get other children or go through divorce and remarriage.
A will may not get your real estate out of probate. However, it will provide the court with proper directives as to how to divide the estate among your relatives.
Every state has unique laws associated with real estate and the probate process. If you have land, houses, or other real estate property within your state, be sure to establish the laws governing probate and follow them to ensure that you secure your property from the process. For instance, if you have put any of the above measures in place, do not change the title of your estate without understanding any implications. Before making any changes to the titles, consult a real estate attorney to rule out any legal consequences.