Guest Editorial: Tools for Transferring Your House to Your Loved Ones By Attorney Amanda N. Jelks
May 14, 2020
For most people, our homes are amongst our most valuable assets. We invest a huge amount of time, resources, and energy into paying for our home and maintaining it. More importantly, we make precious memories that will last a lifetime. When people think about the legacy they want to leave their loved ones, their home is usually at the top of the list of things to protect.
There are different estate planning tools that can be used to make sure the people you select ultimately receive your home. The most common tools used are wills, trusts, and deeds. We generally advise against adding someone as an owner on the deed to your real estate, because doing so almost always makes your real estate available to their creditors, heirs, and spouse. It is also usually not ideal to transfer your house to someone else making them the 100% owner of the house while you are still alive, because that could interfere with your ability to qualify for Medicaid to assist with paying for long-term care and you completely lose control of what happens to your house.
A will or a trust are generally the better tools to use to transfer your real estate to loved ones after you pass away. The primary difference between the two options is whether or not your loved ones have to go through some form of probate to transfer the house to their names or list it for sale. Wills must go through probate court, despite the common myth that says otherwise. The word “probate” actually means “to prove a will” and, hence, the will doesn’t mean anything until a judge says it does. The issue with probate is that it is lengthy (at least one year in Tennessee and can be much longer in Georgia) and the administrative expenses, which come out of your loved one’s inheritance, can be significant. The way to avoid probate is by having a revocable living trust.
A “Revocable Trust” is a trust that has detailed instructions as to what happens to your assets when you pass away. It is revocable in that you can change and update those instructions while you are alive. One can think of this type of trust as a bucket. You can put things into the bucket, you can take things out of the bucket, you own the bucket, and have total control over it. In order to put your home into the “bucket,” you record a deed that gives ownership of your home to the trust.
As long as you are alive and competent, you are in the driver’s seat as it pertains to the trust. When you pass away or if you get to a point where you can no longer manage your affairs, the successor trustee (named by you) will have extensive instructions as to how they should manage your home (e.g., who can live in your home, whether it must be sold after your death, at what age someone can take ownership of your home, or how proceeds from the sale of the house are divided amongst your beneficiaries).
Only a licensed attorney, preferably one who is well-versed in estate planning, should set up a trust for you and your family. There are many factors that are specific to you that need to be weighed when deciding if a Revocable Trust is your best option. So, when you are ready to plan your estate, find a law firm that will work with you to preserve your legacy.
About the Author
|Amanda N. Jelks is the owner of Jelks Law, PLLC, an award-winning law firm located on the North Shore in Chattanooga, Tennessee. She and her team help families and business owners with estate planning and probate matters. Amanda was selected as the “Best Attorney” by the Chattanooga Business Elite in 2020, has been recognized as a Rising Star by Super Lawyers® for the last four years in a row, and the firm was awarded the 2018 Emerging Business of the Year by the Urban League of Greater
Chattanooga. Amanda is licensed in Tennessee and Georgia.
This post was written by Pratt Homes