Should you Place Another Person on Your Home's Title to Avoid Probate?

Jul 2015 | Real Estate

Clients sometimes ask whether there is an advantage to placing their children, friend or another person on the title to their home to avoid probate. While this could help avoid probate, it comes with significant risks and there are different methods to avoid probate if a person’s home is the only reason a probate may be required. It is important to remember that probate in Washington is not as bad as most people think. Washington has a relatively efficient probate system that provides a helpful court-approved structure through which heirs and fiduciaries are protected from future creditor claims or allegations of improper distributions. At the conclusion of a properly administered probate, family members are able to feel comfortable that a loved one’s final wishes have been met and no heirs or fiduciaries will likely face any future legal liability.

If, however, a person’s home would be the only asset necessitating a probate, placing an heir’s name on title may avoid the need for a probate upon the owner’s death. A traditional method for transferring real property (i.e., land or a home) upon death is to add another person to the title as a “joint tenant with right of survivorship.” If this is done properly, the ownership of the property immediately vests in the co-tenant upon the death of one of the other owners. When this type of title is executed, the joint owners own an equal interest in the property. This is different than when the owners are designated as “tenants in common.” As tenants in common, the each owner’s interest in the property is proportionate to their contribution to the property.

A property owner should use extreme caution before adding another person as a joint owner with right of survivorship. The property owner may not reverse this change without the consent of the other owner. The property cannot be sold without the consent of the new owner, or without going through a potentially costly legal action. Such a transfer would also likely be considered a gift for tax purposes and for future eligibility for Medicaid long-term care assistance. Also, if the new owner has a judgment entered against him or her, the judgment will likely attach to the property.

Recently, Washington adopted a new type of deed that may avoid many of these drawbacks and is more commonly recommended today. It is called a “Transfer on Death Deed” (also known as a beneficiary deed). The deed has no effect on title during the owner’s lifetime. It conveys the parcel of real property to the beneficiary named in the deed at the moment the owner passes away, thereby avoiding probate at least as to that property. During the owner’s life, the beneficiary has no rights to the property and his/her liabilities can’t attach to it. We recommend clients consider this type of deed before proceeding with a deed creating joint tenancy.

Whether you are considering a deed creating joint tenancy or a beneficiary designation, however, we recommend that you consult with an attorney who can more fully discuss with you the pros and cons of the decision. If you have questions about your estate plan, contact Chad Horner at Curran Law Firm, P.S.—Experienced, dedicated, and responsive legal representation located in South King County.