There are many ways to transfer property after death.
Estate planning consists of preparing for incapacity during lifetime and transferring property after death to loved ones. Most people think of a Will or a Trust when transferring property. However, there are many ways that property can be transferred:
- Will – a document that names a Personal Representative and directs the disposition of property at death. Wills are probated, but in Idaho, this is usually a simple process.
- Trust – an arrangement to hold property and assets in trust. A Trust avoids probate, but is more complicated and more expensive than a Will, and it requires maintenance as property is sold or bought during one’s lifetime.
- Community Spouse Deed – Most couples in Idaho hold title to their homes as community property. When one spouse passes away his or her name does not automatically come off the title. By changing the title to Community Property with a Right of Survivorship, all that the surviving spouse has to do is record a death certificate to take the deceased spouse’s name off the title.
- Joint Tenancy – Most bank accounts with two people are examples of Joint Tenancy. If there are two people on the account and one dies, the survivor gets the account. However, when parents put their adult children on their bank accounts to help pay bills, they make them a joint-tenant, with the right to the money in the account when the parent dies. This often was not the parent’s intention.
- Pay-On-Death Accounts (POD) – Most financial institutions will set up a Pay-On-Death account, at no extra cost so that at death, the balance in the account is paid to the persons, in the percentage indicated.
- Affidavit of Heirship – Three years after a person’s death, if their estate has not been probated, the person’s heirs may record an Affidavit of Heirship, with the County Recorder, which transfers the title of property to them.
- Give it away! – If one doesn’t foresee needing Medicaid within 5 years, he or she may give away property without affecting his or her eligibility for Medicaid; however, by giving property away during one’s lifetime the individuals receiving the property will lose a step-up in basis and may have to pay capital gains tax.
- Deed retaining a Life-Estate – One may deed property and retain a life estate. This means that one keeps the property for the rest of their life, and at their death the property passes to the grantee named in the deed.
The decision of which method to use depends on the size of the estate, the type of property held, family dynamics and the goals of the person making the Estate Plan. Care should be taken when implementing any strategy, to make sure it is plainly understood and that it achieves the desired results.
Tom Packer is an Elder Law Attorney serving all of Southeast Idaho. As part of his law practice, Tom offers Life Care Planning to deal with the challenges created by long-term illness, disability and incapacity. If you have a question about a Senior’s legal, financial or healthcare needs, please call us.