Many homeowners want to make planning easier for the people they love. One common idea is to add an adult child to a deed or transfer ownership of a home during their lifetime. While those decisions often come from good intentions, they are not always as straightforward as they appear.
A deed is just one piece of a larger estate plan. Before changing how your home is titled, it is worth understanding how that decision could affect your overall planning. When it comes to probate in St. Augustine, FL, taking time to review your options now can help ensure your property is passed according to your wishes.
Why Do People Re-Title Their Homes?
There are many reasons someone may decide to change the ownership of their home. They may want to:
- Help their children inherit the property more easily
- Try to avoid probate
- Prepare for retirement
- Update ownership after a marriage or divorce
- Simplify their estate plan
These are all reasonable goals. The challenge is that different types of property transfers have different legal and financial consequences. What works well for one family may not be the right fit for another, which is why a deed is best considered as one part of a complete estate plan.
Does Re-Titling a Home Automatically Avoid Probate?
Simply changing the title to your home does not automatically avoid probate, the court-supervised process of transferring a person’s property after death. Whether probate is required depends on how the property is owned, the type of deed used, and how the rest of your estate plan is structured.
For example, adding someone to your deed is very different from transferring a home into a properly prepared revocable living trust. Each option has its own advantages and considerations, which is why reviewing the decision as part of your overall estate plan is so important.
What Should You Consider Before Changing Your Deed?
Before signing a new deed, it helps to understand how the transfer may affect other parts of your financial and estate planning. Property ownership is one of the details Florida property owners most often overlook when putting a plan together.
Tax Implications
Giving your home to someone during your lifetime may result in different tax consequences than if they inherit the property after your death. Because tax laws can be complex, it is wise to understand those implications before transferring ownership.
Ownership and Creditor Concerns
Adding another person to your deed also gives them an ownership interest in the property. Depending on the circumstances, their financial situation could become relevant if they experience creditor claims, bankruptcy, or divorce.
These possibilities do not mean a transfer is always a poor choice. They simply highlight why property ownership should be considered carefully before making changes.
Medicaid Planning
Some homeowners believe transferring a home to a child will automatically help with future Medicaid planning. In Florida, Medicaid eligibility includes a five-year look-back period, a review of asset transfers made in the five years before applying. Because these rules are highly fact-specific, it is important to discuss any planned property transfer with an attorney before taking action.
Could a Revocable Living Trust Be a Better Solution?
For many Florida families, a properly funded revocable living trust offers a flexible way to include a home in an estate plan.
When a home is properly titled in the trust, it may pass to beneficiaries outside of formal probate while allowing you to remain in control of the property during your lifetime. Deciding whether a revocable living trust belongs in your plan depends on your assets, your family dynamics, and your long-term goals.
A trust is not the right choice for everyone. The best approach is the one built around your particular circumstances.
Many homeowners also wonder whether transferring their home into a revocable living trust will trigger their mortgage’s due-on-sale clause, a provision that can require a loan to be paid off when ownership changes. In many situations, federal law allows homeowners to transfer a primary residence into their own revocable living trust without triggering that provision. Even so, every mortgage is different, so reviewing the loan documents and discussing the transfer with your attorney is a prudent step.
Key Takeaways
- Simply changing the title to your home does not necessarily avoid probate.
- Different types of property transfers can have different legal, tax, and planning consequences.
- Major life events and changes in property ownership are good opportunities to review your estate plan.
- Every family’s goals are unique, so property transfers should be considered as part of a customized estate plan.
Make Sure Your Property Ownership Supports Your Estate Plan
Changing the title to your home may seem like a simple decision, but it can have lasting effects on your overall estate plan. Taking time to understand your options before signing a new deed can help ensure your property ownership aligns with your wishes and your family’s long-term goals.
At E.P.P.G. Law of St. Johns, Attorney Heather Maltby takes the time to understand each client’s unique family dynamics and create estate planning documents tailored to their needs. If you have questions about probate in St. Augustine, FL, or are considering transferring ownership of your home, an experienced estate planning attorney can help you evaluate the approach that best fits your circumstances. Get a free consultation to learn more.
References: Forbes (June 2, 2021) “Pandemic Home Buyers: Have You Set Up Your Estate Plan?” and Considerable (Sep. 18) “Should you transfer your house to your adult kids?”