Throughout the estate planning process, most people prioritize high-value assets. For many testators thinking about their legacy, real property holdings are the most valuable assets they own.
People who own their own homes have to address their residences. Those with investment real estate also need to arrange for specific beneficiaries to inherit those resources. There are a number of different solutions that people can use when addressing real property in an estate plan.
The three options below are among the most common and effective solutions for transferring real property after the owner dies.
1. Adding co-owners to title
One of the simplest ways to transfer ownership without involving the probate courts or risking a loss of equity is to sign a new deed. Those who have children or romantic partners living with them can change how they hold title to protect the rights of the party living with them.
By holding title as joint tenants with rights of survivorship, the ownership interest of either owner transfers automatically to the surviving occupant after their passing. Jointly owning real property usually prevents it from becoming part of an estate and passing through probate court.
2. Transferring the property to a trust
There are many benefits to transferring ownership of real property to a trust. People can avoid losing equity to creditor claims or Medicaid estate recovery efforts.
They can also protect their home equity from collection lawsuits, divorce and other litigation while they are still alive. A trust can manage the property and allow certain people to live there before transferring ownership or selling the property in accordance with trust documents.
3. Including the property in a will
The simplest solution for real property is to address ownership interests in a will. Those trying to keep their estate plans as simple as possible may simply name beneficiaries to inherit their interest in real property after their passing.
Such arrangements work well in scenarios where the party to inherit is unlikely to move into the property or where the testator wants multiple family members to inherit a joint interest in the property.
Discussing personal resources and legacy goals can help testators establish effective estate plans. Assets that are worth more often require more careful consideration than basic personal property.