Owning a home is a major event in life…perhaps the biggest investment and asset someone might have outside of owning a business. So how can you make it easy for your loved ones to get it without waiting many months and waiting for it to go through probate? If they didn’t “technically” own their own home when they passed away, their estate would most likely be small enough to avoid probate. But how do you make this happen and still retain control?
In many places, all real estate must go through probate after the owners pass away. Otherwise, the deed cannot be properly changed and recorded. One way people seek to avoid this problem is by adding someone else's name to their deed before they pass away. Seems like a logical plan but is usually complicated with issues beyond what they expected…especially if this is a child or possibly a grandchild.
The Daily Republic discussed this matter in "All Things Real Estate: Living trust best way to pass house to children."
Among other problems, adding someone's name to your real estate deed makes it available to that person’s creditors. While this might not be an issue, when it does become an issue it is normally a big one. For example, the new additional owner might have some financial problems and now the home is open to creditors and others to pursue.
A much better way to avoid having real estate go through probate is to create a revocable Living Trust. The real estate can be transferred to the trust and will not have to go through probate after the owner passes away. At this point the Trust owns the house, not the individual, so it can be distributed through the wishes of the trust without a need to go through probate. This is generally a much better solution for most people and their loved ones.