When considering how to structure your estate planning, your real estate is one of the most valuable assets you can give to your loved ones and family members. It is quite easy to gift your real estate in your last will and testament, but is it the best way to give your real property to your loved ones? If you want to transfer your property without the time and expense of probate, there are alternate options available to you.
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Giving Real Estate Away in Your Will
The way to give away your real estate by will is not complicated. To do this, you simply describe the real property and the beneficiary of the real estate in your will. Upon your death, the property will pass according to the terms in your will through the probate court. The probate process is a public process that is time-consuming and costly, so many people want to find alternate ways to gift their real estate upon death.
Other Ways to Give Away Real Estate Upon Your Death
1. Living Trust
A living trust is a trust that you create while you are living. You can put your real estate in the trust and designate a beneficiary. Upon your death, the successor trustee will transfer the real property to your beneficiary according to the terms of the trust. The real estate transfer is done privately and without probate. You have complete control over the trust while you are alive and can change or revoke the trust as you desire, as long as you are competent to do so.
2. Joint Tenants with Right of Survivorship
If you own your real estate in joint tenancy with right of survivorship, it will transfer to the joint owner upon your death without the need for probate. A word of caution here, if you are married and own your real estate in joint tenancy, when one spouse dies, the real estate indeed transfers to the surviving spouse. However, the surviving spouse then needs to make other arrangements for the transfer of the real estate, such as a living trust or transfer on death deed. Otherwise, the property will transfer through a probate proceeding according to the terms of a will or intestacy succession.
3. Transfer on Death Deed (TOD)
In many states, you can create a transfer on death deed with a beneficiary designation. The beneficiary will receive your real estate upon your death without having it go through probate. A transfer on death deeds is a very efficient way to transfer real estate without probate. If a married couple jointly owns the real estate, the transfer on death deed can provide that upon the death of both spouses, the real estate will transfer to the named beneficiaries.
4. Tenancy by the Entirety
Tenancy by the entirety is a type of joint tenancy ownership for married couples in some states. When one spouse dies, the surviving spouse automatically owns the real estate. No probate is necessary.
5. Tenants in Common
Tenants in common can own different percentages of ownership. There are no rights of survivorship, so when one owner dies, the other owners do not automatically own the real estate. The decedent’s ownership passes by will, intestacy, or other estate planning device set up by the owner.
6. Community Property with Rights of Survivorship
You can hold real estate as community property with rights of survivorship in some community property states, such as Wisconsin, Nevada, California, and Arizona. With this type of ownership, when one spouse dies, the surviving spouse automatically owns the real estate in its entirety. No probate is necessary.
Note that a beneficiary of real property inherits the property from the decedent subject to any mortgage, IRS tax liens, or other liens. Federal and state law provides direction on how a lien is prioritized and paid. If you inherit real estate with liens, it is important to seek tax and legal advice.
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Create Your Estate Plan
Regardless of the device you use to transfer real estate to your loved ones upon your death, you need a will as a backup device. If you are ready to create your estate plan, these estate planning tools are state-specific and easy to use.
