It is possible that your home is one of your most valuable assets. As a result, it will likely be a primary concern for you as you engage in estate planning. Deciding what will happen to your home after your passing requires careful planning to better ensure that your wishes are carried out while minimizing legal complications for your loved ones after you’re gone.
No matter where a homeowner lives, this can be a pressing and complicated concern. Estate planning for a home needs to be grounded in a firm understanding of both legal and financial implications of such a decision. Considerations such as probate, ownership structure and tax implications, for example, may be consequential when you’re trying to decide which course of action you should commit to.
Evaluating multiple courses of action
Probate can be time-consuming and costly for beneficiaries. In Texas, several options can help you keep a home outside of probate. A transfer on death deed (TODD) allows you to name a beneficiary who will inherit the home automatically upon your passing, bypassing the probate process. Another option is placing the home in a revocable living trust. A trust will allow you to maintain control of the property during your lifetime before passing to your designated beneficiary without going through probate.
If the home is co-owned, the type of ownership can affect how it is transferred. A home owned in joint tenancy with right of survivorship automatically passes to the surviving owner upon one owner’s death. However, this is only an option for spouses in Texas, as the state generally favors tenancy in common, which allows each owner to pass their share through their estate plan.
A life estate deed is another tool that allows homeowners to remain in the home for life while designating a beneficiary who will take full ownership upon their passing. This approach can help your beneficiary to avoid probate while allowing the original owner to retain control during their lifetime.
Thoughtful estate planning can help you pass along your home according to your wishes. The “best” course of action for you will be unique to your circumstances and wishes. That’s one reason that having individualized legal guidance is crucial.
