People drafting estate plans often focus on their assets that are worth the most money. For many people, their homes are their single largest source of personal wealth. After 30 years of mortgage payments, they may have hundreds of thousands of dollars in home equity. It is critical to address that equity appropriately in an estate plan. Some people aspire to keep their homes out of probate court. Deeds executed prior to death can potentially help them achieve that goal.
How can deeds help protect an individual’s home and the inheritance rights of their chosen beneficiaries?
Deeds can protect co-tenants
Perhaps an aging adult lives with their adult child who acts as their caregiver. They may intend to leave that home to their child after they die. Maybe they cohabitate with a spouse or another romantic partner who plans to remain in the home after they pass.
By executing a deed to add a co-tenant to the title of the property, testators establishing estate plans can help ensure that the person living with them directly inherits their share of the property after their passing. If people hold titles to their homes as joint tenants with rights of survivorship, whoever outlives the other inherits the deceased individual’s interest in the property without the home passing through probate court.
Deeds can allow for rapid transfer
In scenarios where people do not want to share ownership while they are alive or where their beneficiaries do not live with them, deeds can still be powerful estate planning tools. While not every state allows homeowners to execute transfer-on-death deeds to keep their homes out of probate court after their passing, Indiana recognizes these legal instruments.
The owner of real property can execute a deed during the estate planning process that their loved ones can record after their death. A transfer-on-death deed allows for a selected beneficiary to promptly assume control of real property without the delays inherent in probate proceedings. Transfer-on-death deeds can help protect a property from sitting vacant and can prevent probate disputes over who inherits the house.
Taking appropriate steps to address valuable assets is critical for those who want to leave a meaningful legacy. Homeowners may need to consider utilizing creative estate planning solutions to transfer their equity to specific beneficiaries after they die.