If you know anything about estate planning, you probably know that much of it surrounds transferring property after death. While transferring property to new owners after you die lies at the heart of estate planning, it’s not the only thing your estate plan allows you to do. That being said, transferring property after death is vital to a good estate plan and understanding the different ways you can do it will help you craft a plan of your own. Today we will look at the four key methods people typically use to transfer property after death.
Transferring Property After Death: Wills and Intestacy
A last will and testament is the most commonly used estate planning tool today. With a properly drafted will, you can choose how to distribute your property after your death. As long as your will complies with state law, you can choose almost anyone as your inheritors or beneficiaries.
But what if you don’t make a will? State laws already address this possibility. Anyone who dies without a will is said to “die intestate,” and the state laws of intestate succession determine who inherits that person’s property. Similarly, if you create a last will and testament that does not meet state standards, intestacy laws will take over and determine who inherits your property at your death.
Whether you die with or without a will, all individually owned property will have to go through probate before anyone can inherit it.
Transferring Property After Death: Joint Ownership
If you own property as a joint owner with the right of survivorship, the property will transfer to the surviving joint owner immediately after your death, but without any court involvement. A surviving joint owner with the right of survivorship becomes the sole owner of that jointly owned property upon the co-owner’s death, but the transfer of ownership isn’t complete until certain required documentation is completed, such as an Affidavit of Surviving Joint Tenant, usually with a copy of the decedent’s death certificate.
Transferring Property After Death: Transfer on Death Assets
Other assets are not jointly owned, but allow the owner to name a beneficiary. These “transfer on death” or “payable on death” assets are automatically conveyed to the chosen beneficiary upon the death of the owner. For example, if you have a savings account that names a transfer on death beneficiary, that beneficiary will inherit the money in the account immediately upon your death.
Transferring Property After Death: Revocable Living Trusts
If you create and fund a revocable living trust, the assets owned by the trust will transfer to new owners after your death and will do so outside of the probate process. As long as you form your trust properly and take the necessary steps to transfer property into the trust’s name, the assets in your revocable living trust can pass much more easily than if you owned them as an individual.