Passing on your property to loved ones is one of the reasons people create an estate plan. Testators want to protect their spouses, children or other dependent family members from financial stress or hardship after they die.
Few pieces of property will be as valuable or as meaningful to leave to family members than the home where you live. For your children, it may be the space where they grew up. For your grandchildren, it could be a starter home that helps them get established in life.
How can testators arrange for the transfer of real estate as part of their estate plans?
Move the property into a trust
The more valuable your house is, the more complications that can cause for estate administration. It could put you at risk of estate taxes if it is worth millions of dollars, or it could lead to challenges by other family members who wish that they were the ones receiving the home.
By creating a trust and using it to hold ownership of your home, you keep the home out of probate court after your death and make it harder for people to challenge your instructions. You also reduce the risk of the home leading to estate taxes.
Add the future owner as a joint tenant
You can add your loved one to your deed even before you die without worrying about them assuming full control over the property if you cohabitate. If you hold title as joint tenants with rights of survivorship, the person who will inherit your house will receive your share of ownership interest at the time of your death. The house won’t have to pass through probate, and other people won’t be able to make a claim against it in most cases.
You can instruct your executor to sell the property
If your family doesn’t live in the state or if they already own homes of their own, inheriting your house itself may not be the best gift. Rather, they may prefer to share the proceeds from the sale of the home.
This approach is excellent if you don’t have many other assets or if you think your beneficiaries would prefer to not live in the house after your death. You can always include a clause extending the first right of refusal offer to anyone in your family who wants to purchase a home for a fair market value from the estate. Thinking about how to pass on your biggest assets can make estate planning an easier process.