For many Americans, the home where they live is the biggest asset they own. When you plan your estate, you obviously want your most valuable assets to go to the people you love the most.
Passing your home on to the next generation can help support your older children during retirement or give younger children an easier time getting established as adults. Given its value, a home can be a complex asset to transfer as part of your estate.
There are numerous approaches to this process that could help make it faster and reduce the risk of complications.
Use your house to help fund a trust
Trusts are more popular than ever, having gone from tools used by the super-wealthy to the average middle-class American. When you hold the title to your house in a trust, you protect it from claims by creditors if you die with debt or if you need Medicaid benefits in your last years of life.
Moving the ownership of your house to a trust will also help it bypass probate court, meaning that the trustee can immediately give ownership and possession rights to the beneficiary, rather than everyone waiting for months for probate proceedings.
Change how you hold title with someone who lives with you
The way your name appears on a deed matters when it comes to your ownership rights. If you just hold the deed in your name and the name of another party, your share of the home will have to pass through probate court before someone officially inherits it, in most cases.
However, if you execute a deed to change your ownership to joint tenants with rights of survivorship, a child, spouse or friend who lives with you now can inherit your share of the property immediately at the time of your death.
Leave instructions for your executor regarding the property
Do you expect that your children will want to sell the house and split its value rather than live there? Does your estate fall far below the cutoff for estate taxation or do you have enough property that you feel confident you won’t have to worry about creditor claims?
You don’t necessarily have to go through extra steps to bequeath your property to others or have its value distributed among them after a sale. You just need the right language in your last will to make sure your executor follows your wishes.
Exploring your preferences and the wishes of your heirs can give you a better idea about how to handle your home in your estate plan.