Q: What is the best way to leave my home to my children?
A: There are a lot of options available to transfer ownership of a home after death. Each one has its positives and negatives. Which one is best for you will depend on your circumstances.
Perhaps the most common way that people leave real estate to their loved ones is via a probate transfer. The classic example is Mom dies and her will provides that the children receive the home. The kids take the will down to the courthouse, open and administer the estate. After the estate is administered, the kids get title to the home.
Although wills are the most common method used to transfer real estate after a death, trusts are a close second. At one point, trusts were the devise of the wealthy. As the cost of creating a trust plummeted, they have become almost as common as wills.
Trusts offer a convenient way to transfer real estate without the necessity of probate. The transfer can be quick and painless.
Another common method is to add people to the title during a person’s lifetime. You know the routine: Mom decides to add Junior as a joint owner of the home during her lifetime. When Mom passes away, Junior, as the surviving joint owner, owns the home.
Although somewhat less common, transferring title to real estate during your lifetime and retaining a life estate is another option. Essentially, you give away the home but retain the right to live in it during your lifetime. When you pass away, Junior owns the entire interest in the home.
As a general rule, I’m not a fan of adding people to the title of homes or using life estates: at least in most cases. With the transfer on death deed, I’m even more against it.
The transfer on death deed allows a person to name a beneficiary for their home without giving a present interest in it. It’s really not that different than naming a payable on death beneficiary on your bank account. Once the owner passes away, the beneficiary takes title.
As I’ve indicated, you have a number of options available. You just need to decide which one is the best. However, before you decide, I suggest you sit down with an attorney and discuss all of your options and which one best fits your needs.