These days, you may transfer many of your larger assets to loved ones upon your death without them even going through probate. Beneficiary designations, transfer-on-death accounts and pay-on-death accounts allow you to pass on retirement accounts, investment accounts and deposit accounts to one or more beneficiaries directly.
This may leave only your house that would need to go through probate upon your death. Fortunately, even this asset can pass to a loved one directly. Even so, as with most things in life, downsides exist, which means you need to weigh the pros and cons carefully.
You may choose among one of three options for passing on your house outside of probate:
- If you intend to leave your home to your spouse, you may change the title to reflect ownership as joint tenants with the right of survivorship. Upon your death, your spouse would automatically receive full ownership of the home. This also means that your spouse receives an ownership interest in the home. In the event of a divorce, it’s subject to division by a Minnesota court.
- You could put the home into a living trust during your lifetime. You continue to control your home while you live. Upon your death, the beneficiary of the trust receives the home without it going through probate.
- You could gift your home to a loved one by transferring the title during your lifetime. Gift taxes may apply. In addition, you would also lose control over your home since legally someone else would own it. Your loved one’s creditors, ex-spouse and others could file liens against the home or even foreclose on it. The new owner could sell it and evict you unless you take steps to protect yourself from that eventuality if you intend to continue living in the home despite the transfer of title.
In order to ensure that you make the best choice for your needs, the needs of your loved ones and your family’s circumstances, you may want to research each option thoroughly before making a choice. Once you make your choice, you will need to ensure that you follow all of the relevant legalities in order to avoid a potentially costly mistake. If the paperwork is not done correctly, your loved ones could end up having to probate your home after all.