Unfortunately, most people do not understand that becoming a homeowner is one of the most common ways that families eventually end up in court; specifically in probate court. Allow me to explain.
When a couple purchases a home, title companies almost always structure the home purchase so that the new homeowners take title to their new home as "joint tenants with rights of survivorship." That's just a fancy way of saying that both spouses each have complete ownership of the home. Title companies do this, at least in part, for convenience if one spouse passes away. At the passing of one spouse, the surviving spouse/joint tenant automatically holds 100% ownership of the home. That's convenient, right? So how can joint tenancy be a bad thing?
The trouble arises when the surviving spouse/joint tenant passes away, or in the event of a single person owning a home, when that single person dies owning the home in his or her own name. Whenever a family home or other real estate is owned exclusively by deceased persons, the family members of the deceased homeowners will have no way of putting the home on the market and selling it or otherwise taking title ownership of the home without first filing a probate action in court. This requires hiring an attorney and paying for legal services on an hourly basis (in Utah those fees will range from $200-$400 per hour depending on the experience of the lawyer), opening a forum where family members can turn hard feelings and grudges into nightmarish legal battles, potential interference by creditors of the deceased persons, and many other potential problems and uncertainties. The good news is that these scenarios are completely avoidable.
The best way to ensure that your family members will never be involved in a court case involving your home is to hire a qualified estate planning attorney to prepare a revocable living trust AND a new warranty deed in which the homeowners deed the property away from themselves as joint tenants or individuals and back to themselves as trustees of their trust. Better yet, if your trust is already in place before you close on your home, homeowners can ask the title company to set up the closing documents so that the home is owned in the new homeowners trust as soon as closing has occurred. Now, instead of loved ones going to court to ask a probate judge for permission to sell or retitle a deceased person or couple's home, those same loved ones can immediately take action as successor trustees of the trust.
So, you can take action today to make sure that your great decision to purchase a home now doesn't land your loved ones in probate court later if something tragic and unexpected happens to you and your spouse. The revocable living trust is a widely-accepted and affordable way to responsibly pass on your rights to your home without the risks and uncertainties of a probate action.
By: Nathan Croxford, J.D