How Should I Title My House in My Estate Plan?

This is one of the most important questions you should ask:  How should I title my house in my estate plan.  Pauls Valley Democrat’s recent article, “Considerations in how to title your property,” says that there are several types of “automatic” transfer of real property methods that don’t require probate.

The first is Joint Tenancy with Right of Survivorship. This form of ownership passes title to the survivor immediately upon death and avoids probate. The transfer to the survivor happens automatically at the death of one of the joint owners.

To complete the transfer, one must confirm the death in the county records and effectively give notice that one joint tenant has died, and that the ownership is now in the survivor(s) name. This is usually accomplished, by having the survivor complete an Affidavit of Surviving Joint Tenant. The affidavit affirms the death of one party (in many cases a spouse), and the survivorship to title of the other party. This affidavit and a certified copy of the death certificate are filed with the county.

The survivor now owns the property as an individual. He or she can now sell or deed the property to others, including children, without a probate action to clear the title.

Next is Tenancy in Common. Ownership as a tenant in common gives an undivided interest in the whole property (like a third), which stands on its own and can be bought and sold. Tenancy in Common is used when two or more people want to keep their title separate from the other at death. Therefore, an undivided one-half owner has the right to use the entire property, including the right to benefit from one-half of the rent, lease or crop share. However, if several people own an undivided interest, control, usage and management can become complicated.

If, for some reason, a husband and wife own their property as tenants in common, and one spouse dies, his undivided interest remains as a part of his estate. In that case, his estate must be probated to provide a clear transfer of title to the surviving spouse or to other heirs.

It’s an added expense for the survivor that can be avoided, if another form of ownership is used.

You can also consider a Beneficiary Deed.  In Missouri, a beneficiary deed allows a property to be automatically transferred to a new owner when the current owner dies, also without the need to go through probate.  This type of deed also gives the current owner the retained control to change his or her mind about the transfer and to continue to control the property during their lifetime.  This works in much the same way as a POD or TOD designation on a bank account.

One of the best approaches is to title your home in the name of your Revocable Trust.  By creating a revocable trust during your lifetime and titling your real estate in your trust, you can avoid probate and retain maximum control over your real estate during your lifetime.  An experienced estate planning attorney can guide you through this estate planning tool that protects maybe your biggest asset of your estate.

Thinking through this question is a critical component of successful estate planning. Plan in advance with the help of a seasoned estate planning attorney. Don’t create bigger problems for yourself or your heirs, by trying to avoid upfront costs.

Reference: Pauls Valley (OK) Democrat (August 21, 2019) “Considerations in how to title your property”