Property is one of the single most valuable assets to leave your heirs, and if you’re wondering about the best way to leave property upon death, you’re not alone. While many people think about careful estate planning, few actually follow through, and working to ensure that you name who might inherit your property or other assets is key to ensuring your wishes are carried out well after you’re gone. There are actually many different ways to leave property to your heirs after your death. Each has a few different pros and cons.
Leaving Property in a Will in Florida
When you decide to transfer property via a will, which is an easier one of the best way to leave property upon death, you must complete some additional documentation or your heirs will have to go through probate to first prove the will is valid and then have the title of the home transferred to them. If you have several heirs, you can designate them all as beneficiaries of the home in your will. After your death, they will each inherit an equal interest in the home, unless stated otherwise in the will.
Create a Joint Title
Arguably the best way to leave property upon death is when you title your home jointly with your heirs, and they automatically inherit the home when you pass away. This also helps your property avoid probate, which can save some time and money. There’s one big drawback to this option, though. If you want to sell your home for whatever reason, you will need to get consent from anyone listed on the joint title. After the home is sold, the proceeds must be divided between you and your heirs, based on the percentages you had agreed upon.
A joint title can create a few other issues. If your heirs find themselves deeply in debt, your home becomes vulnerable to creditors. Additionally, Medicaid can declare the home a gift, which may make your heirs ineligible for benefits for a period of time because of the value of the property.
Deed Your Home to Your Heirs
Another way to leave your property is to deed your home to your heirs. The advantage of this method is that when you die, your heirs will inherit the home without any hassles. The disadvantages include the following:
- If for any reason you want to sell the home, you need permission and consent from your heirs. You may not even be able to reap the proceeds from the sale.
- If your heirs are dependent on Medicaid, it may render them ineligible for benefits.
- Another disadvantage is that the property may be vulnerable to your heirs’ creditors if they continue to incur debt and not pay it off.
A better option, in this case, is to use an Enhanced Life Estate Deed, also known as a Ladybird Deed. This option permits the property to be passed on automatically to the heirs or any designated recipient at death without the need for probate. With this type of deed, you’ll sign it over to your heirs, but you still retain the right to use, sell, or otherwise manage the property during your lifetime. After you die, your heirs will file your death certificate in the land records as proof of death, then the property passes directly to the heirs without the need for probate. The big disadvantage is that this type of property transfer may not always be acceptable to title insurance companies and financial lenders, and it can make it difficult to refinance or sell the home.
Create a Revocable Living Trust
Arguably another best way to leave property upon death is to use a revocable living trust. Upon your death, the home will be transferred to the designated beneficiaries without undergoing probate. The home stays in your control while you are alive and only passes on to your heirs after you die. You are at liberty to make any changes to the home as you wish. The one major advantage of the revocable living trust is that you have the right to alter or cancel the conditions at any time. There are, however, a few disadvantages. First, it does not offer the same protection against creditors as irrevocable trusts. Because the assets in revocable trust still belong to you, creditors can go after the assets for any debt. This may also make refinance loans quite arduous. Additionally, if you have any debts after you die, they must be paid before the home can be transferred to your designated beneficiaries.
Gift Your Property
Finally, also considered by some to be the best way to leave property upon death, gifting is another method of transferring property to the heirs. With gifts, there are usually no strings attached, and the heirs own the home right away. Florida doesn’t even have a gift tax. The disadvantage, though, is that your heirs can sell your home without your consent as soon as it has been gifted to them. You have no control over it. You will also lose your Florida homestead exemption. Additionally, if your heirs decide to sell your home while you’re still alive, they will have to pay capital gains taxes.
The Worst Choice You Can Make
You could also decide not to do anything at all. If you die, your property will go through the intestate succession laws to determine who has a right to it.
A Better Plan
If you have a property that you would like to pass on to your heirs, give us a call. We can help meet all of your estate planning needs. Contact us today!