Estate Planning Issue
I do have a question in the area of estate planning that you might have some insight. My wife Grace and I have two adult children, both of whom are married and live in Virginia. Grace and I have done the basic planning: wills, power of attorney for finances, power of attorney for health care, and the beneficiaries have been made for all investments. Now, I am looking at options for transferring the house when both Grace and I have passed away. I understand that if I let the house go into probate, it would be a minimum of six months before the two children would take possession. So, I am trying to avoid that issue so that they could sell the house soon after death, if they wanted to. I know that the house could be set up in a trust, but I am also trying to avoid the complexities and costs of a trust.
So, I heard someone tell me about a “Transfer on Death Deed”. That new deed would then pass the house to the two grown children when the last of Grace and me pass away. Do you think this would work to bypass probate and avoid a trust?
Also, what happens to the one or two cars that would be titled to Grace and/or me? Do the transfer of car(s) wait for probate to settle the estate? I have never heard any one talk about this issue.
Thank you.
Terry Says
So I’m wondering why — if you have done all this planning — you did not create a Revocable Living Trust and retitle your major assets (home, investments that are not inside a qualified retirement plan, etc) into the name of your RLT. That automatically solves this problem of your major asset after your death(s).
I’m assuming you have it in joint tenancy with right of survival. But that means if you are alive but have had a stroke or other issue, your spouse cannot take action to sell it and perhaps move into senior living while you are in a memory care unit! A RLT is much more flexible. And if neither of you can act, your successor trustee can take over these duties without a court order.
The reason attorneys still don’t suggest a RLT is they make so much money taking your will through probate!
Yes, since you live in Virginia you can create a POD document to tile your home. Read this article from Nolo.
But it’s a rather complicated and backward way to solve this problem. A RLT should cost no more than a will, and it costs next to nothing to transfer title (an attorney will offer to do it as part ofyour estate plan) and has no tax implications on the cost basis of your home. Please read the longer chapter on this in The Savage Truth on Money, available on Amazon for $10. Guaranteed to save your heirs at least that much in time and hassle!!
As for the cars and your daily checking account, no big deal. But the big stuff should be titled correctly. Find a new estate planning attorney and do it right!
