For many people, their house is their largest asset. Unfortunately, many people also misunderstand the role real estate plays in their estate plan. Your home can be titled, transferred and inherited in many different ways. Without proper planning, your property can cause your heirs extra work and stress when they try to handle your estate after your death.
How is your real estate titled?
Your first step to understanding your home’s role in your estate plan is to understand the title to your property. You know you own the property, but that can mean several things. Here are a few questions to ask:
- Do you own the property by yourself? If you think so, check the title with a professional to be sure. If you were ever married or inherited the property, make sure the proper steps were taken at the time of a death or divorce to put the property in your name, alone.
- Do you own the property with someone else? You may own the property as joint tenants with rights of survivorship, tenants in common or community property with right of survivorship (for married couples). Rights of survivorship means that the other owner can take possession of the property without going through probate, whereas tenants in common means you each only own half the property, and the other half will have to go through probate.
- Are you married? Arizona is a community property state, meaning that both spouses equally own anything you purchased during your marriage, no matter whose name is on the title.
- Does the property belong to your business? Business ownership can create complex probate issues, best left to a professional. In addition to your real estate, your estate plan may need to address business succession.
- Is the property in trust? Many people choose to put their property into a trust as part of their estate plan, which can work well. Creating a trust is not enough, however. You must also transfer the property into the trust with a deed.
Once you understand the title to your real estate, you can make an informed decision on how to pass it along to your loved ones. If you truly are the sole owner, you have a few options, including:
- Make a transfer while you are still alive
- Put it into trust
- Include it in your will
- Create a beneficiary deed
The last option, a beneficiary deed, allows you to pass your real estate on to a named beneficiary, or beneficiaries, at your death without going through probate. You can file it while you are still alive, but it does not take effect until your death. A skilled estate planning attorney can help you decide how best to include your real estate in your estate plan.
