Estate planning is probably not on your to-do list. Our priorities are often more immediate: paying the bills, taking care of the kids, going to work, etc. But here’s a question you’ll have to deal with sooner or later: What happens to my home when I die?
Planning for your own death or incapacity should be a priority. You should name someone you trust to legally handle your bills, your finances, and your estate when you’re gone or incapacitated. Even though it’s an unpleasant task, you’ll rest easier knowing your final wishes have been recorded so that your family won’t be left to sort through your affairs while they are grieving.
You should have a plan to pass on your assets to your heirs, especially your biggest asset -- your home. To better understand how to fit your real estate into your estate plan, our attorneys at Amity Law Group wrote this article to help families like yours plan for the future.
Q: Do I need a will or Living trust to pass on my property?
No, but it’s probably your best option in terms of security and certainty. You probably own your home as a joint tenant or as part of your community property. If your co-owners have the right of survivorship, they will automatically inherit your share of the property when you pass away.
However, owning your property in joint tenancy or as community property with rights of survivorship isn’t ideal for every situation, especially if you want to leave your home to someone who isn’t your joint tenant.
Being a joint tenant or community property owner also doesn’t help if you become incapacitated and unable to make decisions for yourself. Who will take care of your expenses and medical decisions? Having an Advance Health Care Directive and Power of Attorney will help ensure that someone will continue to make your medical and financial decisions if you’re unable to.
Along with a living trust, you can make sure your real estate and other assets are passed on to a loved one without going through probate.
Q: What happens to my home if I don’t have an estate plan?
If you pass away without a will, living trust, or estate plan, your home, money and other assets will have to go through probate court. Probate is where your family will have to spend months or even years to convince the judge to give them their inheritance.
The person who oversees the probate process is the “administrator” of your estate, who must be approved by the court and is allowed to distribute your assets according to state law once a final accounting has been done.
If you create a will, you will be asked to name an “executor” who essentially has the same job as an administrator. Upon your death, your executor would file your will with the probate court to start the probate process and distribute your home and assets according to your wishes.
To avoid probate, the best option is to have a living trust. Why? Scroll down to the last question in this article to find out.
Q: How much does probate cost?
Warning: Probate is a lengthy and very expensive process that can take at least a year (or even longer if there is family conflict over who should get what). Often, you need to hire a probate attorney to represent you in probate court and handle all the paperwork, which adds to the costs of probate.
Check out this table to see the potential costs of probate:
Q: How should I handle my vacation home?
There are several important considerations when you want to make sure that your loved ones inherit your family’s vacation home.
Read our article on passing on your vacation property to learn more: 3 Estate Planning Considerations When Giving Your Vacation Home to Your Children.
Q: What happens after my heirs inherit my home?
If you’ve named someone to inherit your home, this person takes title to the land along with whatever mortgages and debts come along with it. Now that your heir is the legal owner, he or she has full control of the property.
The first thing your heir should consider doing is creating an estate plan to make sure that the property is responsibly passed on to a loved one if the heir were to pass away suddenly.
Alternatively, your heir may choose not to keep the property and sell it, which is their full legal right.
Q: How do living trusts work and how does it protect my real estate?
Think of a living trust like a “safe” that holds all your assets, real properties, and accounts. With a trust, you can name people you trust to manage or distribute your assets when you pass away. With a living trust, your family can skip probate entirely. The process of sorting out your assets is completely private if you have a living trust. But if you only had a will, your assets will have to go through probate, which become public record.
If you have a living trust, you can easily protect any of your real estate by taking title to the property in the name of the trust (instead of taking title with your own name).
Example: Kevin Lee just bought a vacation home and wants to make sure that his new home is funded into his living trust. Kevin wants his son to inherit the home one day.
Instead of taking title on the deed as “Kevin Lee,” he instead names the owner as his living trust, which is “The Lee Family Trust." Now, Kevin sleeps well at night knowing that his son's inheritance is safe.
Protect Your Home by Creating a Living Trust Today
If you don't have a living trust, your dream of leaving your home to your kids might not happen. Amity Law Group's experienced estate planning attorneys can help you create a custom plan to make sure that your loved ones get their inheritance. Schedule a free planning session by calling (626) 307-2800 or click the button below.