With a home most often being a person’s most substantial asset, it only makes sense that they would want to leave it to their children. There are actually a number of different ways you might want to consider the transfer of your home to your children after you pass. We will review some of those methods in more detail here.
Planning for Your Children to Inherit Your Home
One of the more commonly known methods of transferring a home to a person’s heirs is through a will. By naming your children in your will as the beneficiaries to receive your home, they will receive your ownership interest in the home, usually in equal shares. The problem with transfers through a will, however, is that they go through the probate process. Probate can not only be time-consuming and frustrating, but it can also be expensive. Furthermore, transfers through probate are a matter of public record and are, thus, afforded little to no privacy.
To avoid the complexity and expense of probate, many opt to transfer assets such as a home through the use of a living trust. To create a trust, the grantor of the trust appoints a trustee to manage the trust for the benefit of the named trust beneficiaries. In the case of a living trust, the grantor often acts as the trustee for his or her lifetime. To properly fund a trust, ownership of the assets must be transferred to the trust itself. Upon the death of the trust grantor, the trustee will distribute trust assets according to the terms set forth in the governing trust document.
In some cases, you may wish to own property jointly with your children. When a property is held jointly with right of survivorship, then the surviving owners of the property receive the property interest of an owner when the owner passes away. While tenancy by the entirety is only allowed for married couples and registered domestic partners in the state of New Jersey, you could possibly hold property jointly with your children in a joint tenancy arrangement. In a joint tenancy arrangement, no probate would be necessary and your interest in the property would automatically pass to the surviving property owners. This form of ownership, however, could result in your property being subject to the creditors of your children.
While some states permit this, New Jersey does not allow transfer on death deeds for real estate. A transfer on death deed means that a property or asset will automatically transfer to a named beneficiary upon the death of the original owner. New Jersey does allow you to register securities such as stocks and bonds with a transfer on death form. This means that the assets you designate as transfer on death will automatically transfer to your named beneficiary upon your death. No probate proceedings will be required. Instead, the beneficiary will work directly with the brokerage company to have the account transferred.
Estate Planning Attorney
Posted in: Estate Planning