3 Common Ways to Avoid Probate on Your Real Estate Investments

Every year we have many properties we list for sale that have had to go through the timely process of probate before they’re legally allowed to be sold.

Did you know there are ways to avoid probate? This can make it easier on your loved ones if you pass away and leave them your real estate investments or primary residence.

Here are 3 common ways to avoid probate you need to know about:

• Joint Tenancy with Right of Survivorship- Properties that are owned in joint tenancy automatically pass, without probate, to the surviving owner(s) on the deed when one owner dies. Each owner will have an equal percentage of property ownership. This isn’t our favorite way of protecting people from probate though, because adding a person to title as a joint tenant can still have some tax repercussions that can be costly (ask your accountant or estate attorney about this for more details). It also means that the other person on the title basically has control of 50% of your assets while you’re alive (aka if you decide to sell that property, you can’t do it unless the other person on the deed/title also agrees). If the other owner gets sued or divorced, that jointly owned property could be at risk too.

•  Tenancy by the Entirety (only if you’re married)- When married couples take title on their real estate as "Tenants by the Entirety," this means that in the event of one spouse's death, the other spouse will automatically control the property and inherit 100% of ownership. NOTE: The Tenancy By the Entirety option does not prevent your kids from having to go through probate once both spouses pass away, just the surviving spouse.

• Use a Revocable Living Trust- This is one of our preferred recommendations when it comes to avoiding probate. Many people don’t take advantage of putting their property into a Revocable Living Trust because the term sounds unfamiliar or complicated, and some think the process will be too costly. The costs to set up a revocable living trust for real estate investments are often less than paying a probate attorney after your death.

        A Revocable Living Trust can accomplish 3 things:

1. What happens while you’re alive and well

2. What happens if you become mentally incapacitated

3. What happens after your death

The thing to remember with a trust is that once you form the trust, you MUST title your home or real estate investments into the name of the trust for it to work. The trust documents themselves cannot accomplish anything unless you ‘fund the trust’ by adding your property to it (aka recording a quit claim deed that moves the property from your name to the name of the trust- any title company can do this once the trust has been formed). Upon your death, the person you appoint as your Successor Trustee in the trust documents makes sure that your property transfers to the beneficiaries of the trust. This requires no probate. The trustee can also manage the trust if you become mentally incapacitated.

Summary

Depending on your situation, you should ALWAYS speak to a reputable Estate Planning Attorney before you make any decisions, as laws can vary state to state. At The Sandy Hartmann Group, not only do we have extensive knowledge when it comes to working with homeowners that have properties in a trust, probate, or joint tenancy situation, we also have a fabulous network of vendors we can refer you to that our past clients have loved, including Estate Planning Attorneys, Accountants, Appraisers, and more. 

Call us today at (727) 400-3315 to speak to one of our skilled team members or contact us by CLICKING HERE to send us a message.