How to Keep Your Real Estate Outside of Probate without Creating a Disaster
There is an abundance of free information out there available to you, such as from your friends/family/neighbors, commercials, blogs and articles, giving you legal advice about your estate.
But how do you know that information is right for you and your particular situation? Many people attempt their own DIY estate planning to avoid probate, and think that it is a good idea to complete this work without the advice of an attorney.
One of the most common examples of this is trying to avoid probate by adding an adult child as a joint owner on a deed to a home or other real estate.
The thought process is that when the “actual” owner (that would be you) passes away, the real estate does not have to go through probate, because the “beneficiary” (that would be your child, sibling or another person you chose) now has control of the real estate and will split the proceeds from the sale of the home with the intended beneficiaries (such as your other children).
There are several reasons NOT to do this!
When you add another person to your deed, you have, in the eyes of the law, gifted that person an asset, and made that person a legal owner of YOUR home. You are essentially inviting their problems into your world, such as their creditor problems, future bankruptcies, divorce, etc.
Also, once you have added that person to your real estate, you have to involve him or her in any major decisions about your home such getting a home equity loan, selling it or gifting it to someone else.
Additionally, you run the risk of your relationship changing in the future, such that if this person later feels entitled to a share of the asset gifted them (your home), they have some serious leverage over you, now that you have legally made them your partner in owning this asset with you.
Many of you are probably thinking YOUR child would never do something like that, but we attorneys see the bad outcomes, and certainly those parents also thought THEIR children would never give them trouble, either. We also see what happens among siblings after the parents are gone, and sometimes the parents were the glue that held the family together.
Once that “glue” is gone, cracks begin to develop and sometimes the person with all the money (and therefore the power) left in their hands is not so eager to give any up.
On top of the many problems that can arise with gifting someone your real estate in a current transfer to them, there is a solution that works to get most people to the same objective, without having to face the risks discussed above.
In Michigan, we have a tool that allows you to deed your property to yourself for the rest of your life, and then if you happen to still own the property at your death, it automatically transfers to another person or your trust.
This way, you are giving up none of your current property rights, and the real estate transfers outside of probate at your death directly as you want! If you would like to learn more about avoiding probate, please contact our office for a consultation. We look forward to hearing from you.