When most people think about estate planning, what they think about is transferring property after you die. While there is a lot more to estate planning than simple property transfer issues, much of an estate plan will focus on how your property transfers to new owners after your death. Understanding the different ways that property can transfer after you die is essential before you make any decisions about your estate plan. Today we are going to talk about the four basic ways that your property transfers after you die.
Property Transfers After You Die: Jointly Owned Property With a Right of Survivorship
If you own property as a joint owner with the right of survivorship, both you and the other joint owner have an equal right to own the property even after one of you dies. For example, let’s say that you and your spouse own a vacation home as joint owners with the right of survivorship. Should your spouse die, you will become the automatic sole owner of that property.
Property Transfers After You Die: Transfer-on-Death Assets
Similar to jointly owned property with the right of survivorship, property owned as a transfer on death asset will also automatically transfer to a new owner as soon as the original owner dies. For example, let’s say you own a bank account that allows you to name a transfer on death beneficiary. Once you die, the beneficiary you select will automatically inherit the bank account and it’s funds. As with jointly owned property with the right of survivorship, there is no need for court involvement to finalize this kind of property transfer.
Property Transfers After You Die: Property Owned Through a Revocable Living Trust
A revocable living trust allows people to transfer property outside of the probate process. When you transfer property to a revocable living trust, you can choose who you want to inherit the property after you die. Once you die, the trust will remain the owner of the property you transferred into it, and will distribute the property in accordance with your wishes.
Property Transfers After You Die: Testamentary Transfers and Intestacy
When you create a last will and testament you create a document in which you state your inheritance choices. Once you die, someone will submit your will to a probate court, and the court will decide whether that document meets the necessary legal requirements. If it does, your property will be distributed in accordance with the terms you included in your will. On the other hand, should you die without a will, or without a valid will, the pre-existing intestacy laws of the state in which you live determine who will inherit your property.