There are several ways to avoid probate on your home when you die. If you are single, there will be probate when you die unless you choose one of the following options. If you are married and own your home together, your surviving spouse will not have probate; however, there will be probate when the second of you passes away, unless one of these options is done.
Let us assume that you own your home jointly with your spouse and that you have one child. Both of you desire to have your child inherit your home when you both pass away.
The first option would be to add the name of your child to the Deed as a joint tenant with right of survivorship. This is not a good idea. It would affect your ability to claim your full homestead exemption. In addition, you lose control of your property and can only sell it if your child agrees and signs all closing documents. If you wanted to take the child off the Deed, you would be unable to do so. If your child files for bankruptcy, has an adverse judgment or files for divorce, your property could be subject to liens or other legal action. Therefore, I recommend against a Deed with your child as a joint tenant with right of survivorship.
The second option is a Life Estate Deed. There are two types of Life Estate Deed: regular and Enhanced (also referred to as Lady Bird). The regular Life Estate Deed requires that your child join in any sale or other changes on the Deed; therefore, you have lost control and cannot take your child’s name off the Deed if you choose to do so. The Enhanced Life Estate Deed gives you the sole right to sell the property during your lifetime or make any other changes to the Deed without the permission of your child. The Enhanced Life Estate Deed has very specific legal language in order to be effective; therefore, do not attempt to do this on your own.
Even with the Enhanced Life Estate Deed, there are risks, particularly if your child has a bankruptcy, outstanding judgment or undergoes divorce. The worst risk, however, is if, God forbid, your child dies before you or with you in a common accident. Your child’s estate would then become the owner of the property once you died, which would result in probate being required. Thus, the main purpose of the Life Estate Deed is not accomplished.
The best way to avoid probate on your home is to do a Revocable Living Trust. When you sign the Revocable Living Trust Agreement, you also sign a Deed transferring the property to you as Trustees of your Trust. You are able to keep your homestead exemption, maintain complete control of the property during your lifetime and make amendments to your Trust without changing the Deed. There are no risks involved, since your child’s name does not appear on the Deed. The only disadvantage of the Revocable Living Trust is that it will cost more in attorney’s fees. When you discuss the options with your attorney, you should discuss the difference in fees between the Revocable Living Trust and the Enhanced Life Estate Deed. You can then determine whether it is worth saving the money and taking the risks involved in the Enhanced Life Estate Deed.
Please feel free to call me for a free phone consultation regarding any issues pertaining to Wills, Trusts, Deeds, Probate, Power of Attorney or Health Care Surrogate. Call me at (954) 569-4878. My address is 3275 W. Hillsboro Blvd., Suite 204, Deerfield Beach, Florida 33442. My web site is http://www.martinzevinpa.com and my e-mail address is [email protected]
