Specific rules apply to transferring real estate assets.
You have achieved (at least part of) the American dream.
You are a homeowner.
Owning your own home is an incredible blessing, but it does bring with it extra considerations.
You are now responsible for insurance, protection, upkeep and upgrades.
You also have to plan for what will happen to your property when you die.
What should you do? Where should you begin?
Fox News had a recent article, titled “You're Going to Die—Here Are the Best Ways to Deal with Your Home,” with helpful advice to help you plan for the inevitable.
First, passing property through a last will can be messy.
The property must pass through probate, a long and sometimes expensive process (from fees and taxes).
Only after probate proceedings can your heirs take possession and sell or keep it.
Is there a better way?
There sure is.
What are your options?
Tenancy by the entirety.
This method only works if you are leaving your house to your spouse and live in a state where joint ownership by spouses means each spouse owns 100% of the same assets bearing both of their names.
Missouri is one such state.
How does it work?
It is pretty simple.
If you die with your name and the name of your spouse on the deed, then the home continues to be owned "100%" by your surviving spouse rather than through passing through probate first.
Probate could still be an issue after your spouse passes, but he or she will not have to deal with the process.
You can arrange for a similar outcome as tenancy by the entirety when the other owner is your spouse ... or is not your spouse.
In Kansas, however, the deed itself must clearly state the intention to hold the property as "joint tenants with rights of survivorship and not as tenants in common."
There are some potential pitfalls.
What are they?
If your joint tenant is involved in a lawsuit, divorce or debt, your property could be lost even while you are alive.
Consider avoiding this by creating a living trust instead.
A trust allows the trustee to manage any property or assets owned by the trust on behalf of the beneficiary.
The good news about a living trust?
You can act as the trustee and maintain full control until you pass away.
Only when you die will it be passed to the beneficiary.
And there is no probate involved.
Change your mind on your heir?
You can update the beneficiary at any time.
To do this right, you will need an experienced estate planning attorney to set the living trust up for you.
Land trusts (if valid in your state).
What is a land trust?
Like the name indicates, it is a trust, and it only holds land.
As a trust, transfer of property is easier, smoother and less public than through a will.
Unlike a living trust, they require a setup fee and additional yearly fees (usually less than $100).
If you desire more flexibility, you should use a living trust.
As you review these options and others (i.e., "beneficiary deeds" can be a simple alternative in Kansas and Missouri), perhaps one of them seems more suitable to your situation.
Set up an appointment with your experienced estate planning attorney to protect your “American dream” for your loved ones.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Fox News (July 22, 2016) “You're Going to Die—Here Are the Best Ways to Deal with Your Home”