When someone dies with real estate property in their name, probate is often required to transfer that property legally. The costs, time delays, and hassle of probate court lead many people to structure the transfer of their real property to avoid probate. Let’s take a closer look!

Can You Avoid Probate with Real Property Transfers?


Many people use the following methods of probate avoidance to transfer real estate property:


  • Joint property ownership with right of survivorship
  • Pre-death gifts that convey outright real estate titles
  • Living revocable trusts
  • Beneficiary deeds, deeds upon death, or transfer on death deeds


As with any type of estate planning strategy, each of the options above carries its advantages and disadvantages. Here are some of the most common problems with real estate deeds:


1.   Transfer on Death and Deed Upon Forms


Many people attempt to handle their estate planning on their own, using online forms for beneficiary deeds. Unfortunately, many of these online forms are unreliable. Unless a grantor uses the appropriate legal language required by the Deed upon Death Act, the transfer will not be effective.


2.   Title Insurance Challenges


Most title insurance companies refuse to issue a title insurance policy until the new owner has owned the property for at least eighteen months. This is because, in some states, law creditors have eighteen months to file claims against the decendent’s estate.Creditors have priority on assets belonging to an estate.


If the beneficiary sells the property soon after the grantor’s death, the new buyer can have problems obtaining title insurance. Since most mortgage companies require title insurance, this leads to problems borrowing money for the purchase, as well.


3.   Problems with Grantor’s Creditors


In some states, the grantor’s creditors have up to 18 months to file claims to repay debts. Beneficiaries can petition the court to shorten the 18-month creditor period, but this would require probate and negate the reason grantors used a beneficiary deed in the first place.

If you’re worried about the creditor claim period, using a trust may be the better option. The creditor claim period on trusts can be as little as 120 days.


4.   Handling of Contingencies


Unlike a revocable trust, the transfer upon dead deed does not provide solutions for contingencies. Therefore, if a beneficiary dies with or before the grantor, there is no contingent beneficiary designated. Trusts also help protect distributions to minor children who are not mature or sensible enough to handle inheritances properly at the time of the transfer. While trusts can cost a bit more to execute, they provide protection from these problems and greater flexibility in the long run.


Contact a Probate Attorney for Your Free Consultation


There are several things you should consider regarding your real estate property during the estate planning process. Since there are several issues beneficiaries of a deed on death may face, it’s important to talk to a probate attorney to effectively plan transfers of real estate property upon death.


If you want to avoid potential problems caused by real estate transfers, contact a Lancaster probate attorney to help. Derryberry & Associates is here to provide you with a free consultation and help you through all aspects of the estate planning process.