If you want to leave your house to your child when you die, there are a couple of different options available to you. In California, you can leave your house and other assets to your children by creating a trust or a will. In California, I recommend my clients use a revocable living trust, as opposed to a will.
Why You Should Use a Trust Instead of a Will to Leave Your House to Your Child
Although California law allows you to leave your home to your children through a trust or a will, I recommend using a revocable living trust (RLT). The RLT is usually the best option for most families because it is more flexible and efficient than a will.
First of all, if you leave your home to your child when you die by a will, the will must be processed in probate court before your property can transfer. Probate court takes time, costs money, and requires court approval before the transfer can be made.
The RLT, on the other hand, does not have to be processed in probate court. When you pass away, the trustee you have appointed to manage your assets, including your home, can transfer the property to your child at the time of your choosing, without court involvement or court approval.
You can also use an irrevocable trust to transfer your house to your child, but the irrevocable trust is less flexible than the RLT. Generally speaking, as its name implies, the irrevocable trust cannot be revoked once you set it up, so if you transfer real estate into an irrevocable trust it would be hard for you to undo that action if you needed to liquidate that asset or sell the home before you pass away.
If you never intend to sell your home before transferring it to your child, and if you have additional interests that warrant giving up the revocability of your trust, such as avoiding creditors or reducing personal tax liability during your lifetime, then the irrevocable trust may be a better option for you. Otherwise, the RLT will likely be the best method for leaving your home to your child due to its efficiency and flexibility.
Make Sure Your Home is Properly Transferred to Your Trust
In order for the appointed trustee of your RLT to have the authority to manage your assets, including transferring your home to your child, your RLT must be properly funded with that asset. This means your home must be deeded to your trust.
If you purchased your home prior to forming your RLT, you will need to transfer your home to your trust by way of a trust transfer deed, which we can prepare for you. This is a crucial step for leaving your home to your child through your trust. If your trust transfer deed is not properly created and recorded, your home will not be made a part of your trust assets and your trustee will be unable to transfer your home to your child.
If you acquire real estate after your trust is already created, and you wish to leave the home to your child when you die, you should make sure title to the property is in the name of the trustee of your trust in order to fund your trust with that asset. This can be accomplished by using the trust transfer deed.
How to Leave Other Property to Your Child
Typically your home will be just one of many assets you own. You may have cash accounts or other property you want to distribute to your child or other beneficiaries after you pass away.
You can set up your trust to provide your trustee with instructions on how to distribute this property, and when to distribute it. A spendthrift trust ensures your child will not receive large sums of money until he or she is responsible enough to receive that money. You can also dole out cash to your beneficiaries over several years, or simply direct your trustee to provide for the health, education, and maintenance of your beneficiaries.
When you set up a RLT, you have the flexibility to preserve your trust assets and prevent your child or children from depleting their inheritance too soon.
Providing for Your Incapacitation
As an estate planning lawyer, I can help you create an entire estate plan to make sure your property is transferred to your beneficiaries. This includes more than just transferring your property when you die, but also includes caring for your health and assets in the event of your incapacitation, and ensuring your loved ones are crystal clear on your wishes in the event you are unable to communicate during your incapacitation.
Your notarized power of attorney will give the agents of your choosing the power to manage your assets during your incapacitation. Your advance healthcare directive will give your agent or agents the power to make medical decisions on your behalf. Finally, your HIPAA release form will make sure you medical agents have access to your protected health information in order to make informed medical decisions on your behalf.
Get Help Preparing for the Future and Providing for Your Children
Thoughtful estate planning is crucial to make sure your wishes are upheld after you pass away. This includes decisions over your healthcare, memorial services, and transferring property to your loved ones after you pass away.
To get help with your estate plan, call me at 888-250-8450, or click the Free Consultation form below.