Avoiding probate is one important goal for most people who are in the process of estate planning. If you only have a modest estate, you might think that devoting the time and money to consult with an estate planning attorney is not necessary. One of the biggest mistakes that people in your situation make is to sign over the title to their home to a loved one under the belief that it will avoid probate and save money. Before you do this, there are some things you should consider first.
Once you sign over the deed, your loved one is the legal owner of the property. You have no legal claim to the property from that point on.
If your loved one wishes, he or she can use the property as collateral for a loan. If he or she defaults on the loan, for any reason, the lender may foreclose on the home and sell it.
The home could be attached to a debt or judgment owed by your loved one.
The home could become part of the division of property in a divorce.
If your loved one dies before you, and does not leave behind a Last Will and Testament, the state laws of intestate succession will determine who receives the home and it will not likely be you if there is a surviving spouse and/or children.
Gift taxes may apply to the transfer of the home.
- The Magic of Grantor Trusts - November 1, 2023
- IRS Confirms Grantor Trust Status Alone Does Not Cause a Step-Up in Basis - October 26, 2023
- Understanding the Importance of the Simultaneous Death Act - October 19, 2023
