How to make your home disappear
And why your kids might be glad you did...
Greetings!
Back in July I shared a personal story about working through the estate for Elizabeth’s Dad:
Thankfully, we’ve since gotten it sorted and the remaining insurance policy has paid out benefits to Elizabeth and her 2 sisters. And they’ve given these funds to their Mom, which was the original plan.
Elizabeth’s Dad lived in a retirement community so we didn’t have to address keeping a home out of probate in his situation, but for many of you, your home will go through probate.
Unless you create a revocable living trust and retitle your home in the name of your trust.
Do you need a trust?
I’ve written about that before here:
Many of my clients have chosen to go this route and have setup their own living trust to provide additional privacy and to prevent their heirs from having to deal with probate at all.
And if you live in Georgia, as many of my clients do, you don’t really have other alternatives to keep your home out of probate.
But this changed just a couple of months ago.
On July 1st, 2024, Georgia passed legislation introducing a new option. More on that in a moment…
You can - and should - assign beneficiaries on each of your retirement accounts.
And your life insurance policies.
You can also assign beneficiaries on non-retirement accounts using a “Transfer on Death” (TOD) or “Payable on Death” (POD) designation.
Note: TOD beneficiaries are usually setup for brokerage or other non-retirement investment accounts. POD beneficiaries are typically used for bank accounts, CDs, or money market accounts.
Whether for insurance, retirement, or non-retirement accounts, these beneficiary designations are recognized whether you have a Will, a trust, or any other estate planning vehicles in place.
They’re recognized even if you have zero estate plan in place.
As a result, specific beneficiary designations pass outside the probate process and override anything in your Will or other estate documents.
And thanks to this recent Georgia legislation, you can now opt to use something called a “Transfer on Death deed” (TOD deed) on your home, potentially allowing your home to transfer to your heirs outside of probate.
Here’s more from this article from Peach State Wills & Trusts:
To properly execute a TOD deed, the owner(s) of the property sign a deed designating a beneficiary or beneficiaries, and record the deed with the Clerk of Superior Court in the county where the property is located. The TOD deed must be witnessed and notarized like other deeds. Importantly, the beneficiary (or beneficiaries) listed on the TOD deed do not need to sign or otherwise accept the deed in any way while the owners are alive. The owner(s) of the property retain full ownership of the property and control over it. The owner(s) may revoke the designation at any time. A revocation can occur either by the designation of a new beneficiary in a subsequent deed, by the execution of an affidavit done in compliance with the law that revokes the designation which is also filed with the county land records, or by the transfer of the entire property to another person during the owner's life. Additionally, if a beneficiary predeceases the owner, the beneficiary's death revokes the designation as to that beneficiary.
If you don’t live in Georgia, you might still be able to utilize a TOD deed.
According to this article from Trust & Will, here are the states that currently recognize a TOD deed:
Alaska
Arizona
Arkansas
California
Colorado
District of Columbia
Hawaii
Illinois
Indiana
Kansas
Maine
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Mexico
North Dakota
Ohio
Oklahoma
Oregon
South Dakota
Texas
Utah
Virginia
Washington
West Virginia
Wisconsin
Wyoming
You may notice that Georgia isn’t included in the list above. I’m guessing this article was published prior to the July legislative changes in my home state.
I’m not an attorney, so I can’t provide legal advice.
I can’t draft estate planning documents.
Having said that, a top priority in each and every financial plan I work on is to make sure you have an estate plan in place and that it’s up to date and reflects your current wishes.
But there are some common myths around estate planning:
Your estate plan might consist of a Will, powers of attorney, and an advanced directive for healthcare (aka a Living Will).
Or it could also include a revocable living trust. Or other estate planning strategies.
Note: I’ve heard more than one story about families that setup a revocable living trust but then never get around to “funding it” by retitling their home, non-retirement accounts, and other titled assets and accounts into the name of their trust. This effectively makes your trust worthless - at least in terms of avoiding probate - and it will diminish its impact on your estate planning.
And if you live in Georgia, or one of the other states in the list above, you might also include a TOD deed as part of your estate plan.
A revocable living trust or a TOD deed are just two strategies to effectively make your house disappear when it comes to probate.
Every one of my clients tell me they don’t want to be a burden on their children.
With this in mind, it may be worth revisiting your estate plan and its administration once you’re no longer around.
If you need to put an estate plan in place for the first time, or if you have an estate plan but haven’t reviewed or updated it in more than 5 years, I encourage you to reach back out to your estate planning attorney and have a conversation.
Or if you need help locating a good estate planning attorney to help you with your estate plan, let me know if I can help.
I know several attorneys in the Atlanta area I can recommend, and through my network of financial planners across the country I can likely help you find a good attorney in your area if you’re not in Atlanta.
Or if you want to take a more DIY approach, you can use something like Trust & Will.
Regardless of which approach you take, and whether or not you ever utilize a TOD deed, make sure you have an estate plan in place and review it regularly to keep it up to date.
Links & Things
I encourage you to read this recent Jonathan Clements article:
Among the 8 points he makes in the article above, reply or leave a comment and let me know which of them resonates most with you.
Any additional thoughts? Suggestions?
Hit reply or leave a comment and share what’s on your mind…
Until next Wednesday,
Russ