Those creating or updating estate plans often need to consider the best solutions available for different high-value assets. There are sometimes ways to keep valuable property out of probate court.
Particularly when there are worries about creditor lawsuits or Medicaid estate recovery efforts, people might prefer to keep as much of their high-value property out of probate court as possible. The home where someone lives might be their most valuable asset and could be a priority consideration when establishing or updating an estate plan.
There are several ways to keep real property out of probate court after someone dies. The three tactics below are among the most common.
Transferring the home to a trust
Individuals aren’t the only ones capable of owning real property. Trusts are legal constructs capable of holding ownership of high-value assets. Some people establish trusts specifically so that their homes aren’t vulnerable to creditor claims as they age or probate claims after they die. The decision to transfer the ownership interest of a home to a trust can prevent the house from becoming part of the owner’s estate after their passing.
Adding a co-owner while still alive
Only assets that belong solely to one person become part of their estate. Jointly-owned property often does not pass through probate court. Adding a co-owner can help keep the home itself out of probate court, but the interest of one owner might still be subject to probate oversight. Certain types of vesting, such as joint ownership with rights of survivorship, can help ensure that an individual’s interest in their home doesn’t pass through probate court after they die.
Drafting a transfer on death deed
It is possible to establish a deed that grants another person an ownership interest in the property but only after the current owner’s death. A transfer on death deed keeps real property out of probate court while also allowing the current owner full control over the property. They have the authority to alter or revoke that deed at any point and do not have to share their ownership interest while they are still alive.
There may be other viable solutions for addressing a primary residence in an estate plan if the goal is to keep the property out of probate court. Discussing relationships and estate planning goals at length with a skilled legal team can help individuals select the best options given their circumstances. Those who want to keep certain property out of probate court may need to draft more than a basic will to achieve that goal.