In an estate plan, you decide who should receive your property when you die, and also how you want them to receive it. Real property is land and any improvements, like a house or a crop, that have been made to that land. When leaving real property to someone, you have several options. Your options depend on who you want to transfer it to, how much control you want to maintain during your lifetime, and whether you're worried that it might be sold to pay your debts.
A Will Can Transfer Your Property
Many people use wills to transfer their real property when they die. The property passes through the probate process so ownership can legally transfer to beneficiaries. If someone dies with a lot of debt, it's possible that their real property might have to be sold or liquidated in probate to raise money to pay the debts. Therefore, a will may not be a surefire way of transferring real estate to the intended owners.
You Can Move Your Property to a Trust
You can also create a living trust to transfer your real property to a beneficiary. This process involves transferring title to the property to your trust while you're alive. Then, when you die, the trust transfers the property to the beneficiary you've named. This avoids probate, but it does not always protect your property from sale if you leave a lot of debt.
Deeds Can Transfer Property
Transferring your property by deed can avoid probate and protect it from sale to satisfy creditors. Some states recognize beneficiary deeds, which are also called transfer-on-death deeds in some jurisdictions. You can name your beneficiary in the deed, and the property will be transferred to that person automatically at your death. During your lifetime, your beneficiary has no ownership interest in your property.
You can also jointly hold title to your property with your beneficiary. If you include survivorship language in the deed, it will pass directly to that person when you die. However, with survivorship deeds, your beneficiary has an ownership interest in the property while you're alive. You're co-owners.
You Can Create a Life Estate
Another way to transfer use of real property is to give someone a life estate in your property. It passes to that person when you die, but the individual does not actually take ownership of the property. He or she only gets to live there. When the beneficiary of a life estate dies, your property then passes to someone else named in your will or life estate documents.
An Estate Lawyer Can Help
The law surrounding the transfer of real property in an estate plan is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact an estate lawyer.