A will is an essential document you must have in your estate plan, but it’s not the only important estate planning consideration. Having a will helps ensure that your assets will be distributed the way you want after your estate is probated, but it’s also critical to properly title your assets before you die. Doing so can facilitate a faster transfer of assets without requiring probate.
At the Estate Planning & Elder Care Firm of Michigan, our Howell estate planning lawyers will help you with all aspects of estate planning, including helping you use asset titling as a probate avoidance strategy. We are committed to helping you develop a solid estate plan that will facilitate the smooth transfer of all your assets after your death, according to your wishes.
How Asset Titling Can Be an Effective Probate Avoidance Strategy
The way you title your assets, including real estate, bank accounts, and investments, can affect how they are distributed to your loved ones upon your death, whether your estate will need to be probated, and the amount of estate taxes your family could have to pay. Failing to title your assets properly is an estate planning mistake that can result in consequences you didn’t intend and do not want.
Your will determines how assets that are part of your estate are to be distributed after you die, following the probate process. If you do not have a will, your property would be distributed to your heirs under Michigan’s intestate inheritance laws. However, assets with a designated beneficiary or that are titled in a way that facilitates an automatic transfer of ownership after your death are not the property of your estate and do not have to be probated.
How Beneficiary Designation Plays a Role in Probate Avoidance
One way you can avoid probate is to list one or more beneficiaries on each of your financial assets, such as bank accounts, investments, life insurance policies, and retirement accounts. Financial assets with designated beneficiaries do not have to go through the probate process but will instead be transferred to your beneficiaries after your death.
How Proper Real Estate Titling Can Avoid Probate in Michigan
Asset titling also impacts how your real estate is transferred after your death. The way your house and other real property you own, such as vacation property or vacant lots, can impact how this property is distributed after you die and whether probate is required.
If, for example, you own your home or other real estate jointly with someone else, the way in which the property is titled impacts whether your ownership rights transfer to the other owner after you die without probate or if your interest in the property will transfer to specific heirs specified in your will, which requires probate. Two common ways homes and other real property are titled in Michigan include:
- Tenants in common. If you own your home or other real property as tenants in common with another person, you each have a separate interest in the property. When one of you dies, the property does not automatically transfer to the other property owner. Instead, the decedent’s share of the property would be transferred to their heirs according to their will once the will has been probated.
- Joint tenants with full rights of survivorship. Another way to own your home and other real property is as joint tenants with full rights of survivorship. This is the most common way for spouses to own real estate. When one of you dies, your ownership interest in the property automatically transfers to the surviving owner. It is not considered an asset of the estate, so probate is not required.
How a Living Trust Can Be an Effective Probate Avoidance Strategy
Another way you can title your property to avoid the probate of your estate is to create a living trust, also referred to as a revocable trust. With a living trust, you would maintain complete control of your property during your lifetime but appoint a trustee to transfer the assets that the trust owns according to your wishes after you die.
One of the benefits of having a revocable trust is that any assets owned by the trust are not considered probate assets. If you decide to create a living trust, you must properly title your home, other real estate, and other assets in the name of the trust. Any property that is not titled in the trust’s name or does not have a listed beneficiary would have to be transferred to your family members through the probate of your estate. So, even if you set up a living trust, you still need a will.
At the Estate Planning & Elder Care Firm of Michigan, our estate planning lawyers can help you decide if a living trust is a good option for you. We will help you transfer your property into the trust if you want us to create one for you and discuss asset titling options with you to streamline the transfer of your property and possibly avoid the probate process after your death.
