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The probate process can be a lengthy one. And for individuals involved in the transfer of property after someone’s death, it’s preferable to avoid the court fees and legal jargon that come with probate. Ideally, homeowners can seek strategies to steer clear of probate while ensuring their property lands in the right hands.
Read on to discover five ways homeowners can transfer property, and what to be mindful of with each strategy.
1. Use a Revocable Living Trust
With a revocable living trust, a grantor places assets in a trust that will then be distributed to named beneficiaries. This process essentially transfers a property into a trust that will be managed by a trustee, and it avoids probate.
Why choose a revocable living trust? You are in control, and you can change your mind about the details of the trust at any time. You can even decide to sell your property. You can also choose how to divvy up assets, like property or bank accounts, among your beneficiaries. Plus, the courts won’t be involved, and your finances will be kept private. Just be aware that these trusts can be costly, and they won’t offer any tax benefits. Further, you’ll need to be mindful of critical details, like ensuring that your property is titled and funding the trust.
2. Look into a Life Estate Deed
A life estate deed designates a life tenant to keep and use a property for life. They can live in it, rent it, or use it as they see fit. A different person, known as the remainderman, inherits the home when the owner dies. Through this type of deed, the owner can remain in their home and stay away from probate. This process also enables easier planning for families eager to pass on ownership of a home to a specific individual
3. Try a Transfer on Death Deed
With a transfer-on-death deed (TOD deed), a property owner can transfer their property to a beneficiary when the property owner dies. A beneficiary will be named in the deed, and the deed must be signed and notarized. A search for beneficiary deeds Missouri can provide templates that make constructing a deed much easier.
In general, deeds are a simpler and cheaper estate planning solution than trusts. You won’t have to deal with probate, and, as an owner, you can maintain control of your property until your death. In other words, you can redecorate or do a kitchen remodel without affecting the terms of the deed. Be aware that you’ll need to complete the required paperwork correctly, and your beneficiary won’t have any control until a property owner passes away.
4. Consider a Joint Tenancy
Another simple option to consider is a joint tenancy. In this scenario, two or more people share ownership of a property. The survivor takes on full ownership when the other owner passes away. This is an ideal setup for married couples or partners. The downside? It’s tricky to add another joint tenant, and you have no flexibility when it comes to your share of the property. In other words, you can’t leave it to an heir if you pass away.
5. Pursue Community Property with Right of Survivorship
As another option, married couples in some locations can keep property as community property with right of survivorship. In other words, if one spouse passes away, the home will be given to the other spouse without any hassles. This process is simple, and it can result in lower capital gains taxes. At the same time, this option is limited to a handful of states, like Texas and Califronia, and those involved must be married.
Determine the Best Way to Transfer Property
Each property transfer method mentioned above brings specific pros and cons. As homeowners try to determine the best route, it’s important to consider tax impacts, plus whether they desire to keep or relinquish control of their home. Ultimately, working with a qualified estate planner can help unpack the nuances of all options. Determining the right plan can provide peace of mind and avoid costly fees and delays during a property transfer.
