What happens to a property when an owner dies is largely determined by what plans the property owner put in place during their ownership. It could be that the Deed provided for the property to pass by survivorship, the deceased may have had a Last Will and Testament, they may have established a Trust or they may have recorded a Transfer on Death Deed. Today, we’ll focus on these four documents and how they affect the property after the owner’s death.
Survivorship through the Deed
When more than one person is on the Deed, they often own that property together as either Joint Tenants with the Right of Survivorship or as Tenants by the Entirety. In either of these instances, if one of the owners dies, then the remaining owner(s) or the surviving owner(s) automatically becomes the sole property owner. Nothing needs to be recorded at the courthouse to reflect this change. The surviving owner would only need to produce a death certificate to sell the property.
If there is no survivorship in the deed or only one owner, then we hope that the deceased made other plans for the transfer of ownership.
Last Will and Testament
Where assets are concerned, especially real estate, the Highland Title + Escrow team highly recommends that everyone has a Last Will and Testament. It eliminates a lot of confusion and conflict during what is often a difficult time.
The Last Will and Testament lays out the estate plan for the deceased. It will name who inherits the property. While it is important to have a Will, there are some downsides. It will need to be filed at the probate office and land records and will eventually become public record. Some parties may not want the information in the Will to become public for various reasons, such as leaving one child in the family out of the Will.
One way to avoid probate is to place the property in a Trust.
Trusts
A Trust is a legal entity created to hold assets. A trust never gets recorded at the courthouse and doesn’t need to go through probate. Typically, people set up a Revocable Living Trust. This type of Trust can be changed or amended at any time by the initial Trustees. For example, Mr. and Mrs. Smith created the Smith family trust; they own it and can do whatever they want with it until they pass, just as if they owned it individually. The difference kicks in when they pass. When Mr. and Mrs. Smith pass, the property will remain in the trust. The successor trustee can step in and sell the house after producing a copy of the Trust and a death certificate.
Transfer on Death Deeds
As a relatively new document (Virginia has only allowed these deeds since 2013), Transfer on Death Deeds (TOD) act more like an insurance policy. For example, a TOD states that when Mr. Smith dies, his property goes to his daughter, Jane Smith. It doesn’t give any current rights to Jane, so she can’t take out a loan or try to sell the property while Mr. Smith is alive.
A benefit regarding these types of deeds is that changes can be made. If Jane and Mr. Smith get into an argument and he no longer wants to leave his property to her, he can change who receives the property. Mr. Smith doesn’t need Jane’s approval or signature.
All of these options are effective for transferring the property. Each situation is different, and it is important that you talk with an attorney to determine the best course of action for you. If nothing is set in place, statutes determine who gets the property, and someone you didn’t want could assume ownership.
If you have any questions or concerns regarding steps to take in these procedures, please contact us here.