Consider these options when avoiding probate.
When a person owns real estate in his/her name only at the time of death, the estate will need to be probated. This can be avoided by the use of joint ownership or transfer on death deeds (TODDs).
Another approach is to have the property owner sign a quit claim deed or other conveyance to heirs or other parties, but not record the quit claim deed with the county recorder’s office. A quit claim deed does not need to be recorded with the county recorder’s office to be valid. The only requirements for a valid deed are that the deed is signed by the property owner and delivered.
For example, a property owner can execute a quit claim deed transferring title to the property to her children. She would then give the deed to her children, but the deed would not be recorded. This is a valid transfer. When the property owner dies, the children would record the deed and complete the transfer.
One advantage of this is there is no public record of the real estate transfer. This conveyance avoids probate.
On the other hand, parties want to be careful not to lose the quit claim deed. There should be several original copies of the deed. The original copies should be stored in a variety of places, including a safety deposit box or other fire proof box.
Joint tenancy is a method of owning property by two or more persons. When people own property as joint tenants and one of the owners dies, the surviving owner automatically becomes the complete owner of the property. It is not necessary for there to be a probate to transfer ownership. Ownership by joint tenancy is superior to any gift under a will.
An alternative way for two or more people to own property is as tenants in common, In a tenants in common situation, when one owner dies, the deceased owner’s children or heirs take over the deceased owner’s share of the property. They will then own the property with the surviving owner.
A life estate is an ownership interest in property, usually real estate. If a person owns a life estate in property, this means that the person has the exclusive right to use and possession of the property during the person’s lifetime. When the person dies, title to the property automatically goes to the future title holder. A future title holder is also called a “remainderperson”.
Actually, the record owner of the title is the remainderperson, but his/her interest in the property is subject to the life estate. In a typical case, a deed will transfer interest to the remainderperson, so the title will be held in the remainderpersorn’s name, but the deed will include a restriction stating that the estate is subject to the life estate of another person called a “life tenant”.
A life estate is an estate planning tool that can help avoid probate. It can also be used to preserve assets of a person’s estate.
Transfer on death deeds
Transfer on death deeds are a relatively new estate planning tool in Minnesota. As in the case of a bank account where an owner can designate a person to be a payable-on-death beneficiary of the account, a transfer on death deed allows a person to designate another person to own the real estate upon his/her death. A transfer on death deed can avoid probate. A transfer on death deed is different from a life estate in that the after-death beneficiary does not own an interest in the property until the death of the owner.