Most people do not think of creating an estate plan before they are in their 40s or even their 50s. However, if you own a home, regardless of the cost of the home and regardless of your age, you should create an estate plan. Even if you are in your 20s, your family could end up losing a high-end home if you are in an accident and become incapacitated or you lose your life. Always contact an experienced estate attorney for help drafting your will and other estate documents, including trusts.
In today’s day and age, many people decide to live together without formally getting married. Most closing agents will title your home so that you own one half and your significant other owns one half. In most states, your significant other’s half of the house will have to go through probate unless the house is appropriately deeded. The ways you may title your home include:
Joint Tenancy: Gives you equal rights to the property. If one party passes, the ownership of that person’s half passes to the surviving tenants. However, if you are not married, you will have an extra step to take if you want to transfer your half to someone not listed on the deed.
Tenancy in Common: This is the most common way deeds are titled if two people buying a house are not married. Both parties have equal rights to the property. However, if one person passes, their half goes to their heirs and not to the other person on the deed unless that person is an heir. Each person can take out a mortgage on their half without getting permission from the others on the deed. This type of title usually has to go through probate.
Tenants by the Entirety: Only those legally married may title their home as tenants by the entirety. The house is automatically transferred to the living spouse. The property does not have to go through probate if it is titled as tenants by the entirety.
You may title your home in other ways, though those ways are not as common. Creating a will and a trust, along with titling your home properly, ensures that your half goes to the person you want it to go to, and, if done correctly, could save your spouse or significant other the hassle of going through probate.
Many types of trusts exist. When you choose the right type of trust for your situation, you may be able to avoid probate and avoid some taxes when your home transfers on your death. However, the main reason for a trust is so that your loved one may continue living in the home or taking care of the financial responsibility of your home should you become incapacitated. Certain trusts also keep your home and its equity from being eaten up by creditors such as nursing homes and doctors. Always consult an attorney to discuss the complexities of creating a trust and the rest of your estate plan.
