The goal of estate planning is to make sure your property is handled according to your wishes following your death.
The difference between establishing an estate plan and simply expressing your wishes to your heirs is that an estate plan is legally binding. The courts will follow the instructions you leave in a valid will or trust and can order others, such as executors, to follow those instructions as well.
Here are three ways that having an estate plan can guarantee that your child inherits your home.
1. Leave Your Home to Your Child in Your Will
The most common way to pass your home to your child is through a will. A will contains legally binding instructions for transferring property upon death.
When you die, a probate judge will be assigned to oversee your estate. During the proceedings, claimants can seek payment from your estate. A bank, for example, might seek payment for the balance of your car loan.
At the end of probate, your executor transfers all remaining property as instructed in your will. If they fail to do so, the probate judge can issue an order or even replace them.
There are three potential wrinkles with this plan.
First, a court will only enforce a valid will. As such, you take a huge risk by writing your will yourself. It’s wise to have your will drafted by a knowledgeable estate lawyer who knows California’s probate laws.
Second, your house could be sold during probate to satisfy your debts. If you die with unpaid taxes, your executor might need to sell your house to pay the government.
Third, probate can get costly. Estate lawyers often design estate plans to minimize the cost of probate.
2. Put Your Child’s Name on the Deed
If you designate your child as a joint owner with the right of survivorship, they’ll automatically become the owner of your home when you die. Your home would not go through probate.
Again, this plan has drawbacks. For one thing, your child would need to become a joint owner during your lifetime. This means that they could sell their share of your home while you’re living in it.
Your child’s creditors could go after their share of your home as well. If you own a home jointly with a child who files for bankruptcy, your child will include the ownership interest as part of the bankruptcy estate.
3. Set Up a Trust
A trust is a legal entity that establishes ownership of any property put into it. But the trust holds that property to benefit another person, who is known as the beneficiary. A trustee runs the trust to ensure the instructions included with it are carried out properly.
With a living trust, you would transfer ownership of your home to the trust during your lifetime. You’d then continue to live in the home until your death. At that point, the trustee would follow your instructions for disposing of your property. Since this transfer happens outside of a will, a probate court won’t get involved.
At the same time, the trust document binds the trustee. This means that your child can force the transfer if the trustee refuses. Thus, you get the legal power of a will without the problems of probate.
Trust documents can get complicated. You should have an estate lawyer draw up the trust to ensure that it’s formed correctly.
Protect Your Home With an Estate Plan
Your home is likely your most valuable asset. To make sure it ends up where you want it, consider discussing your circumstances with an estate lawyer. An experienced attorney can formulate a plan that will ensure that your wishes are carried out while minimizing potential risks and complications.
To learn more about how you can benefit from an estate plan, contact Heritage Legal, PC, the premier estate planning law firm in Palm Springs, CA.