Home ownership is a principle part of the American dream. Homes are special places, too—they’re where people make memories, raise children and spend precious time. It follows, then, that you might want your home to go to a specific person when you pass away. If you’re curious about how to leave a house to someone in a will, we’re here to break it down for you.
In a Nutshell
There are three main ways to leave your home to another person after you’re gone: in a will, via a living trust or using the right words in your deed.
A quick note before we continue: we’re not lawyers, and this blog post isn’t legal advice. You should always contact a competent estate planning attorney to assist in your estate planning. In the meantime, the following points might help you get started to create a plan:
1. Create a Will
The first way to leave your home to someone is to put that person in your will. A written will is a legally binding document outlining what you’d like to happen to your assets when you die. The people you name as recipients of property, money or items in your will are known as beneficiaries.
Most of the time, the assets you include in your will go through probate after you pass away. This is a court-supervised process meant to ensure that your possessions and your property is legally transferred to your beneficiaries according to the terms of your will. Any outstanding debts you owe are paid before assets get distributed, though.
Can I Leave My Home to More Than One Person?
You can leave your home to several people if you want to—all of your children, for example, or your siblings. When you choose this path, each beneficiary gets an undivided stake in your property. They each have to decide whether to keep that stake, or whether to sell their stake—or buy another beneficiary’s stake.
Before you decide to leave your home to multiple people, consider their relationships with one another. Are they likely to get along, or will the shared property create a rift? If you do foresee a situation where one beneficiary might seek to force a sale via the courts system, consider splitting your assets in a different way.
Is Probate Always Necessary?
Probate is a common part of will execution, but it’s not inevitable. Not all wills go through probate—and in most states, probate isn’t legally necessary. Like other court-driven processes, there are pros and cons to probate. On the one hand, probate is time consuming, but on the other, it ensures that your assets pass legally to beneficiaries.
What Should You Never Put In Your Will?
Wills are a useful and legally binding way to distribute assets. Having said that, there are things you shouldn’t put in your will:
- Pensions. Pension funds will go to your spouse—check with your pension to see what the process is.
- Joint accounts. Any money will automatically go to joint account holders, so there’s generally no need to mention your joint account in your will.
- Life insurance. This will be paid out separately to your beneficiaries listed in the policy after you pass away.
In addition to the above, try to avoid stipulating conditions in your will. Don’t make any part of your inheritance contingent upon a beneficiary behaving in a specific way. Why? The bottom line is that conditions like these aren’t usually legally enforceable.
2. Create a Living Trust
You don’t have to modify your will to accommodate a new beneficiary. If you prefer, you can create a living trust instead. After you create the trust, you can gradually transfer assets into it. You’ll continue to benefit from the assets in your living trust—including your home—while you’re alive. When you pass away, the items in your trust get transferred to your beneficiaries.
If you forget to put your home in the trust before you die, your property will have to go through probate. Assuming you choose this route, make sure you set up your trust sooner rather than later.
What Are the Advantages of a Living Trust?
One of the biggest advantages of a living trust is that it eliminates the need for probate. Property passes legally from one party to the next via the trust, potentially reducing stress at a difficult time for your beneficiaries.
If you want to leave your home to several people, doing so via a trust rather than a will can reduce conflict. You can name a trustee for your trust—someone whose job it is to decide who gets what—and state that they can decide what happens to your property.
3. Modify Your Deed
Sometimes, the easiest way to leave a home to someone you care about is to modify the verbiage in your deed. Three of the most common statements people include are:
- Transfer on Death (TOD). You maintain full control over your home and can borrow against it until your death.
- Joint Tenant with Right of Survivorship. Any financial decisions you make—getting a reverse mortgage, for instance—have to be approved by the joint tenant.
- Tenants by the Entireties. About half of all states allow this option, which only applies when property owners are married to each other.
Any of those deed modifications will cause your home to pass to your beneficiary when you die. If you already have a joint deed—with your spouse, for instance—you can still create a TOD modification. In that case, your home won’t pass to the secondary beneficiary until both you and your spouse pass away.
It’s important to check with your state before inserting any of the terms listed above into your existing deeds. Many states now recognize TOD deeds, for instance—but not all states. If you don’t live in a TOD state, you can use the living trust method above to transfer your property instead.
Best Way To Inherit a House Recapped
End-of-life planning isn’t easy, but it is essential. In the absence of a will, probate can be a long, drawn out and emotionally messy process. You can make things easier for those left behind by writing a will, setting up a living trust or modifying the deed to your home.
A qualified estate planning attorney can help you make the right decisions as you create your end-of-life plan. They may also suggest that you repay debts before you pass away—and in that case, tools like ExtraCredit can help you pinpoint outstanding accounts showing on your credit, so you can draft a financial to-do list.
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