King & Wood, P.A.

What Is Considered an Asset in an Estate?

“This is an important question to ask, because the answer could tell you whether you need to worry about estate taxes, beneficiary issues or probate concerns.”

Estate planning attorneys are often asked if a particular asset will be included in an estate, from life insurance and real estate to employment contracts and Health Savings Accounts. The answer is explored in the aptly-titled article, “Will It (My Home, My Life Insurance, Etc.) Be in My Estate?” from Kiplinger.

When you die, your estate is defined in different ways for different planning purposes. You have a gross estate for federal estate taxes. However, there’s also the probate estate. You may also be thinking of whether an asset is part of your estate to be passed onto heirs. It depends on which part of your estate you’re focusing on.

Let’s start with life insurance. You’ve purchased a policy for $500,000, with your son as the designated beneficiary. If you own the policy, the entire $500,000 death benefit will be included in your gross estate for federal estate tax purposes. If your estate is big enough ($12.06 million in 2022), the entire death benefit above the exemption is subject to a 40% federal estate tax.

However, if you want to know if the policy will be included in your probate estate, the answer is no. Proceeds from life insurance policies are not subject to probate, since the death benefit passes by contract directly to the beneficiaries.

Next, is the policy an estate asset available for heirs, creditors, taxing authorities, etc.? The answer is a little less clear. Since your son was named the designated beneficiary, your estate can’t use the proceeds to fulfill bequests made to others through your will. Even if you disowned your son since naming him on the policy and changed your will to pass your estate to other children, the life insurance policy is a contract. Therefore, the money is going to your son, unless you change this while you are still living.

However, there’s a little wrinkle here. Can the proceeds of the life insurance policy be diverted to pay creditors, taxes, or other estate obligations? Here the answer is, it depends. An example is if your son receives the money from the insurance company but your will directs that his share of the probate estate be reduced to reflect his share of costs associated with probate. If the estate doesn’t have enough assets to cover the cost of probate, he may need to tap the proceeds to pay his share.

Another aspect of figuring out what’s included in your estate depends upon where you live. In community property states—Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, and Wisconsin—assets are treated differently for estate tax purposes than in states with what’s known as “common law” for married couples. Also, in most states, real estate owned on a fee simple basis is simply transferred on death through the probate estate, while in other states, an alternative exists where a Transfer on Death (TOD) deed is used.

This legal jargon may be confusing, but it’s important to know, because if property is in your probate estate, expenses may vary from 2% to 6%, versus assets outside of probate, which have no expenses.

Speak with an experienced estate planning attorney in your state of residence to know what assets are included in your federal estate, what are part of your probate estate and what taxes will be levied on your estate from the state or federal governments and don’t forget, some states have inheritance taxes your heirs will need to pay.

Reference: Kiplinger (Dec. 13, 2021) “Will It (My Home, My Life Insurance, Etc.) Be in My Estate?”

Does a TOD Supersede a Trust?

“Both help you pass down assets, while avoiding the time and expense of probate. However, one has much more flexibility than the other.”

Many people incorporate a TOD, or “Transfer on Death” into their financial plan, thinking it will be easier for their loved ones than creating a trust. The article “TOD Accounts Versus Revocable Trusts—Which Is Better?” from Kiplinger explains how it really works.

The TOD account allows the account owner to name a beneficiary on an account who receives funds when the account owner dies. The TOD is often used for stocks, brokerage accounts, bonds and other non-retirement accounts. A POD, or “Payable on Death,” account is usually used for bank assets—cash.

The chief goal of a TOD or POD is to avoid probate. The beneficiaries receive assets directly, bypassing probate, keeping the assets out of the estate and transferring them faster than through probate. The beneficiary contacts the financial institution with an original death certificate and proof of identity.  The assets are then distributed to the beneficiary. Banks and financial institutions can be a bit exacting about determining identity, but most people have the needed documents.

There are pitfalls. For one thing, the executor of the estate may be empowered by law to seek contributions from POD and TOD beneficiaries to pay for the expenses of administering an estate, estate and final income taxes and any debts or liabilities of the estate. If the beneficiaries do not contribute voluntarily, the executor (or estate administrator) may file a lawsuit against them, holding them personally responsible, to get their contributions.

If the beneficiary has already spent the money, or they are involved in a lawsuit or divorce, turning over the TOD/POD assets may get complicated. Other personal assets may be attached to make up for a shortfall.

If the beneficiary is receiving means-tested government benefits, as in the case of an individual with special needs, the TOD/POD assets may put their eligibility for those benefits at risk.

These and other complications make using a POD/TOD arrangement riskier than expected.

A trust provides a great deal more protection for the person creating the trust (grantor) and their beneficiaries. If the grantor becomes incapacitated, trustees will be in place to manage assets for the grantor’s benefit. With a TOD/POD, a Power of Attorney would be needed to allow the other person to control of the assets. The same banks reluctant to hand over a POD/TOD are even more strict about Powers of Attorney, even denying POAs, if they feel the forms are out-of-date or don’t have the state’s required language.

Creating a trust with an experienced estate planning attorney allows you to plan for yourself and your beneficiaries. You can plan for incapacity and plan for the assets in your trust to be used as you wish. If you want your adult children to receive a certain amount of money at certain ages or stages of their lives, a trust can be created to do so. You can also leave money for multiple generations, protecting it from probate and taxes, while building a legacy.

Reference: Kiplinger (Dec. 2, 2021) “TOD Accounts Versus Revocable Trusts—Which Is Better?”

What a Will Won’t Accomplish

“That last will and testament you have tucked away? It may not be the last word on what happens to your stuff after you are gone. Instead, that legal document’s directives for doling out your wealth may be overruled by other paperwork and relevant laws.”

Everyone needs a will. A last will and testament is how an executor is named to manage your estate, how a guardian is named to care for any minor children and how you give directions for distribution of property. However, not all property passes via your will. You’ll want to know what a will can and cannot do, as well as how assets are distributed outside of a will. This was the topic of “The Legal Limits of Your Will” from AARP Magazine.

Retirement and Pension Accounts

The beneficiaries named on retirement accounts, including 401(k)s, pensions, and IRAs, receive these assets directly. Some states have laws about requiring spouses to receive some or all assets. However, if you don’t keep these beneficiary names updated, the wrong person may receive the asset, like it or not. Don’t expect anyone to willingly give up a surprise windfall. If a primary beneficiary has died and no contingency beneficiary was named, the recipient may also be determined by default terms, which may not be what you have in mind.

Life Insurance Policies.

The beneficiary designations on an insurance policy determine who will receive proceeds upon your death. Laws vary by state, so check with an estate planning attorney to learn what would happen if you died without updating life insurance policies. A simpler strategy is to create a list of all of your financial accounts, determine how they are distributed and update names as necessary.

Note there are exceptions to all rules. If your divorce agreement includes a provision naming your ex as the sole beneficiary, you may not have an option to make a change.

Financial Accounts

Adding another person to your bank account through various means—Payable on Death (POD), Transfer on Death (TOD), or Joint Tenancy with Right of Survivorship (JTWROS)—may generally override a will, but may not be acceptable for all accounts, or to all financial institutions. There are unanticipated consequences of transferring assets this way, including the simplest: once transferred, assets are immediately vulnerable to creditors, divorce proceedings, etc.

Trusts

Trusts are used in estate planning to remove assets from a personal estate and place them in safekeeping for beneficiaries. Once the assets are properly transferred into the trust, their distribution and use are defined by the trust document. The flexibility and variety of trusts makes this a key estate planning tool, regardless of the value of the assets in the estate.

Reference: AARP Magazine (Sep. 29, 2021) “The Legal Limits of Your Will”

Does a Beneficiary on a Bank Account Override a Will?

“Beneficiaries, in general, are people or entities that the holder of an account designates to receive the assets in the account, typically, in the event of the account holder’s death.”

You’ve named beneficiaries to accounts many times already, when you opened an IRA, bought an insurance annuity, a life insurance policy, started an investment account, signed up for a pension or bought shares in a mutual fund. These are the accounts that come to mind when people think about beneficiary designations. However, according to a recent article in Forbes titled “Do You Need a Beneficiary for Your Bank Account?,” they are not the only financial instruments with beneficiary designations.

When you open a bank account, most retail banks don’t ask you to name a beneficiary, but it’s not because you can’t. If the bank allows beneficiaries on their accounts, it’s usually a pretty simple process. In most cases, you’ll be asked to fill out a form or go through the bank’s process online.

Banks don’t push for beneficiary accounts because they are not required to do so. However, this is a smart move and can be a helpful part of your estate plan. The biggest benefit: funds in the account will be distributed directly to the beneficiary upon your death. They won’t have to go through probate and won’t be part of your estate. Otherwise, whatever assets you keep in your bank accounts will be counted as part of your estate and subject to probate.

Probate is a court process to validate the will and the named executor, supervising the distribution of assets from your estate. In some cases, it can be complicated, take months to complete and depending on the size of your estate, be expensive. If the money in your bank accounts does not go to a beneficiary, it can be used to pay off estate debts instead of going straight to a beneficiary.

For married people, bank account funds are treated differently. Half of the balance goes to your spouse upon death, the rest goes through probate.

Naming a beneficiary is a better alternative. The beneficiary may collect the money immediately. They’ll need to go to the bank with an original or certified copy of a death certificate, required identification (usually a driver’s license) and the money is transferred to them.

If you are married and don’t live in a community property estate, a surviving spouse may be able to dispute the terms of a beneficiary arrangement, but that will take time.

Another means of transferring assets in a bank account is to change your accounts to POD, or Payable On Death accounts. There are other names: In Trust For (ITF), Totten Trust or Transfer on Death (TOD). The named beneficiary is referred to as the POD beneficiary.

There is considerable flexibility when naming a POD beneficiary. It may be a living person, or it can be an organization, including a nonprofit charity or other trusts. You are not allowed to name a non-living legal entity, like a corporation, limited liability company (LLC) or partnership.

Beneficiary designations override wills, so if you forget to change them, the person named will still receive the money, even if that was not your intent. You should review beneficiaries for all of your accounts every year or so. Divorce, death, marriages, births and any other lifetime events are also reasons to check on beneficiary designations.

Reference: Forbes (July 9, 2021) “Do You Need a Beneficiary for Your Bank Account?”

What Happens If an Unmarried Partner Dies?

“A proper estate plan will help those left navigate the disposition of assets and the probate court system, especially for unmarried couples and some married same-sex couples.”

If you, like so many others, found yourself settling the affairs of a loved one in the last 18 months, you may be well aware of the challenges created when there is no estate plan. The lack of planning can create an enormous headache for loved ones, explains a recent article titled “3 Estate Planning Tips for Same-Sex Couples” from The Street. If this is true for married couples, then it’s even more important for unmarried couples.

Planning for incapacity and death is not fun, but unmarried couples in serious relationships need to plan for the unknown. Even married same-sex couples may face hostility from family members, including will contests and custody battles over children. There are three key issues to address: inheritance, incapacity and end-of-life care and beneficiary designations.

If a partner in an unmarried relationship dies and there is no will, assets belonging to the decedent pass to their family, which could leave their partner with nothing. With no will, the estate is subject to the laws of intestacy. These laws almost always direct the court to distribute the property based on kinship.

A will establishes an unmarried partner’s right to inherit property from the decedent. It is also used to name a guardian for any minor children. Concern about the will being contested by family members is often addressed by the use of trusts. When property is transferred to a trust, it no longer belongs to the individual, but to the trust. A trustee is named to be in charge of the trust. If the surviving partner is the trustee, he or she has access and control of the trust.

A trust helps to avoid probate, as property does not go through probate. A will also only goes into effect after the person who created the will passes away. A revocable living trust is effective as soon as it is established. Trusts allow for more control of assets before and after you pass. The trustee is legally bound to carry out the precise intentions in the trust document.

Establishing a trust is step one—the next step is funding the trust. If the trust is established but not funded, there is no protection from probate for the assets.

Incapacity and end-of-life planning allows you to make decisions about your care, while you are living. Without it, your unmarried partner could be completely shut out of any decision-making process. Here are the documents needed to convey your wishes in an enforceable manner:

Healthcare power of attorney (proxy). This document allows you to name the person you wish to make healthcare decisions on your behalf. You may be very specific about what treatments and care you want—and those you don’t want.

Healthcare directive. The healthcare directive lets you designate your wishes for end-of-life care or any potentially lifesaving treatments. Do you want to be resuscitated, or to have CPR performed?

Durable financial power of attorney. By designating someone in a financial power of attorney, you give that person the right to conduct all financial and legal matters on your behalf. Note that every state has slightly different laws, and the POA must adhere to your state’s guidelines. You may also make the POA as broad or narrow as you wish. It can give someone the power to handle everything on your behalf or confine them to only one part of your financial life.

Beneficiary designations. Almost all tax-deferred retirement accounts and pensions permit a beneficiary to be named to inherit the assets on the death of the original owner. These accounts do not go through probate. Check on each and every retirement account, insurance policies and even bank accounts. Any account with a beneficiary designation should be reviewed every few years to be sure the correct party is named. Estranged ex-spouses have received more than their fair share of happy surprises, when people neglect to update their beneficiaries after divorce.

Some accounts that may not have a clear beneficiary designation may have the option for a Transfer on Death designation, which helps beneficiaries avoid probate.

Review these steps with your estate planning attorney to ensure that your partner and you have made proper plans to protect each other, even without the legal benefits that marriage bestows.

Reference: The Street (June 2, 2021) “3 Estate Planning Tips for Same-Sex Couples”

Do Unrecorded Deeds Help or Hurt Estate Planning?

“While discussing estate planning with my parents, they told me that an attorney prepared a deed for them but told them not to record it yet.”

Using an unrecorded deed to transfer property without probate sounds like an easy way to transfer ownership of the family home, but is it asking for trouble? That’s the topic of an article from NWI Times entitled, “Estate Planning: Are unrecorded deeds a good idea?” The fact that the idea came from a family’s attorney makes the question even more important. The attorney told the parents the children could record the deed after their deaths and transfer the property without probate.

Most estate planning attorneys haven’t seen this technique used in a long time, and some may never have heard of it. There’s probably a good reason for this—it’s an estate mess waiting to happen.

First of all, what if the deed itself goes missing? One of the most common questions estate planning attorneys hear is “What do I do because Mom lost the_____?” Fill in the blanks—the deed, the title to the car, the bank statement, etc. Important documents often get lost. If a deed is missing and can’t be recorded, title can’t be transferred. Hoping an important piece of paper doesn’t get lost is not an estate plan.

Until the deed is recorded, and title transferred, the holders of the title still own the property. They can mortgage the property or sell it. The plan for the children to receive and record the deed may not have legal authority.

Laws about how deeds must be created change. Indiana made a change to the law in 2020 that required signatures on deeds to be witnessed. Without the witness, the deeds can’t be recorded. If the adult child is holding a deed for the recording and it’s not witnessed because the parents have died, it can’t be recorded.

There are better ways to transfer ownership of the family home that adhere to the general principles of estate planning.

There are also different types of deeds that are more commonly used in estate planning to transfer home ownership without going through probate. One is a Transfer on Death Deed (TOD Deeds). A TOD deed allows a person to name beneficiaries on their real estate property without giving up any rights of ownership. The TOD deed is recorded, so there’s no worry about mom or pop losing the paperwork.  The TOD deed can also be changed by recording another deed or using an affidavit.

Trusts can also be used to transfer home ownership and keep the transaction out of probate. An estate planning attorney will be able to explain the different types of trusts used to transfer a home. State laws vary, and allowable trusts vary, so talking with a local estate planning attorney is the best option.

Reference: NWI Times (May23, 2021) “Estate Planning: Are unrecorded deeds a good idea?”

Short-Cuts to Estate Planning can Lead to Costly Consequences

“Over the years I get all kinds of questions from people. And boy, have I heard some doozies. But one common one I get is called the ‘lazy (or poor) man's (or woman's’) estate planning.’ This type of estate planning has some very negative tax consequences.”

It seems like a simple way for the children to manage mom’s finances: add the grown children as owners to a bank account, brokerage account or make them joint owners of the home. However, these short-cut methods create all kinds of problems for the parent’s estate and the children themselves, says the article entitled “Estate planning: When you take the lazy way out, someone will pay the price” from Florida Today.

By adding an adult child as owner to the account, the child is being given 50% ownership. The same is true if the child is added to the title for the home as joint owner. If there is more than $30,000 in the account or if the asset is valued at more than $30,000, then the mother needs to file a gift tax return—even if no gift tax is due. If the gift tax return is not filed in a timely manner, there might be a gift tax due in the future.

There is also a carryover basis in the account or property when the adult child is added as an owner. If it’s a bank account, the primary issue is the gift tax return. However, if the asset is a brokerage account or the parent’s primary residence, then the child steps into the parent’s shoes for 50% of the amount they bought the property for originally.

Here is an example: let’s say a parent is in her 80s and you are seeing that she is starting to slow down. You decide to take an easy route and have her add you to her bank account, brokerage account and the deed (or title) to the family home. If she becomes incapacitated or dies, you’ll own everything and you can make all the necessary decisions, including selling the house and using the funds for funeral expenses. It sounds easy and inexpensive, doesn’t it? It may be easy, but it’s not inexpensive.

Sadly, your mom dies. You need some cash to pay her final medical bills, cover the house expenses and maybe a few of your own bills. You sell some stock. After all, you own the account. It’s then time to file a tax return for the year when you sold the stock. When reporting the stock sale, your basis in the stock is 50% step-up in value based on the value of the stock the day that your mom died, plus 50% of what she originally paid for the stock.

If your mom bought the stock for $100 twenty years ago, and the stock is now worth $10,500, when you were added to the account, you now step into her shoes for 50% of the stock—$50. You sold the stock after she died, so your basis in that stock is now $5,050—that’s $5,000 value of stock when she died plus $50: 50% of the original purchase. Your taxable gain is $5,450.

How do you avoid this? If the ownership of the brokerage account remained solely with your mother, but you were a Payable on Death (POD) or Transfer on Death (TOD) beneficiary, you would not have access to the account if your mom became incapacitated and had appointed you as her “attorney in fact” on her general durable power of attorney. What would be the result? You would get a step-up in basis on the asset after she died. The inherited stock would have a basis of $10,000 and the taxable gain would be $500, not $5,450.

A better alternative—talk with an estate planning attorney to create a will, a revocable trust, a general durable power of attorney and the other legal documents used to transfer assets and minimize taxes. The estate planning attorney will be able to create a way for you to get access or transfer the property without negative tax consequences.

Reference: Florida Today (May 20, 2021) , “Estate planning: When you take the lazy way out, someone will pay the price”

What Is the Purpose of an Estate Plan?

 

“You can reduce stress and expenses for yourself and your family, if you develop an estate plan that includes these important documents.”

No one wants to think about becoming seriously ill or dying, but scrambling to get an estate plan and healthcare documents done while in the hospital or nursing home is a bad alternative, says a recent article titled “The Essentials You Need for an Estate Plan” from Kiplinger. Not having an estate plan in place can create enormous costs for the estate, including taxes, and delay the transfer of assets to heirs.

If you would like to avoid the cost, stress and possibility of your spouse or children having to go to court to get all of this done while you are incapacitated, it is time to have an estate plan created. Here are the basics:

A Will, a Living Will, Power of Attorney and a Beneficiary Check-Up. People think of a will when they think of an estate plan, but that’s only part of the plan. The will gives instructions for what you want to happen to assets, who will be in charge of your estate—the executor—and who will be in charge of any minor children—the guardian. No will? This is known as dying intestate, and probate courts will make all of these decisions for you, based on state law.

However, a will is not enough. Beneficiary designations determine who receives assets from certain types of property. This includes life insurance policies, qualified retirement accounts, annuities, and any account that provides the opportunity to name a beneficiary. These instructions supersede the will, so make sure that they are up to date. If you fail to name a beneficiary, then the asset is considered part of your estate. If you fail to update your beneficiaries, then the person you may have wanted to receive the assets forty years ago will receive it.

Some banks and brokerage accounts may have an option of a Transfer on Death (TOD) agreement. This allows you to plan out asset distribution outside of the will, speeding the distribution of assets.

A Living Will or Advance Directive is used to communicate in advance what you would want to happen if you are alive but unable to make decisions for yourself. It names an agent to make serious medical decisions on your behalf, like being kept on life support or having surgery. Not having the right to make medical decisions for a loved one requires petitioning the court.

Financial Power of Attorney names an attorney in fact to manage finances, paying bills and overseeing investments. Without a POA, your family can’t take action on your financial matters, like paying bills, overseeing the maintenance of your home, etc. If the court appoints a non-family member to manage this task, the family may see the estate evaporate.

Creating a trust is part of most people’s estate plan. A trust is a means of leaving assets for a minor child, or someone who cannot be trusted to manage money. The trust is a legal entity that inherits money when you pass, and a trustee, who you name in the trust documents, manages everything, according to the terms of the trust.

Today’s estate plan needs to include digital assets. You need to give someone legal authority to manage social media accounts, websites, email and any other digital property you own.

The time to create an estate plan, or review and update an existing estate plan, is now. COVID has awakened many people to the inevitability of severe illness and death. Planning for the future today protects the ones you love tomorrow.

Reference: Kiplinger (April 21, 2021) “The Essentials You Need for an Estate Plan”

Court Victory for Adults Caring for Parents at Home

“Advocates are celebrating an important victory for individuals who provide care for their parents at home. The new decision will likely lead to a substantial expansion in the number of homes transferred to those caregivers.”

A New Jersey Appellate Division recently reaffirmed the state’s regulation that allows older adults to transfer their homes to adult caregiver children without Medicaid penalty, reports an article titled “Major Victory for Adults Who Provide Home Care for Parents” from The National Law Review. The regulation permits the home to be transferred with no Medicaid penalty, when the adult child has provided care to the parent for a period of two years. This allows the parents to remain at home under the care of their children, delaying the need to enter a long-term care facility.

New Jersey Medicaid has tried to narrow this rule for many years, claiming that the regulation only applies to caregivers who did not work outside of the home. This decision, along with other cases, recognizes that caregivers qualify if they meet the requirements of the regulation, regardless of whether they work outside of the home.

The court held that the language of the regulations requires only that:

• The adult child must live with the parent for two years, prior to the parent moving into a nursing facility.
• The child provided special care that allowed the parent to live at home when the parent would otherwise need to move out of their own home and into a nursing care facility.
• The care provided by the adult child was more than personal support activities and was essential for the health and safety of the parent.

In the past, qualifying to transfer a home to an adult caregiver child was met by a huge obstacle: the caregiver was required to either provide all care to the parents or pay for any care from their own pockets. This argument has now been firmly rejected in the decision A.M. v. Monmouth County Board of Social Services.

The court held that there was nothing in the regulation requiring the child to be the only provider of care, and the question of who paid for additional care was completely irrelevant legally.

It is now clear that as long as the child personally provides essential care without which the parent would need to live in a nursing facility, then the fact that additional caregivers may be needed does not preclude the ability to transfer the home to the adult child.

The decision is a huge shift, and one that elder law estate planning attorneys have fought over for years, as there have been increasingly stricter interpretation of the rule by New Jersey Medicaid.

While Medicaid is a federal program, each state has the legal right to set its own eligibility requirements. This New Jersey Appellate Court decision is expected to have an influence over other states’ decisions in similar circumstances. Since every state is different, adult children should speak with an elder law estate planning attorney about how the law of their parent’s state of residence would apply if they were facing this situation.

Reference: The National Law Review (March 22, 2021) “Major Victory for Adults Who Provide Home Care for Parents”

How Does Home Ownership Transfer after a Parent Dies?

“My father passed away recently. How do we remove his name from the title to the home? Can we record a death certificate or have mom sign a new deed?”

The first thing you’ll need to know about selling a home after the death of a parent, is how your parents held title, or owned, the home, begins the recent article “Home ownership after the death of a spouse” from nwi.com. In most cases, the home is owned by a couple as “joint tenants with rights of survivorship” or as “tenants by the entirety.” The latter is less common.

Tenancy by the entirety is a form of ownership available only to married people in a limited number of states and offers several advantages to the owners. It creates an ownership interest where the spouses own property jointly and not as individuals. It also creates the rights of survivorship, so that the surviving spouse owns the property by law when the first spouse dies.

Joint tenancy with rights of survivorship is similar to tenants by the entirety, in that they both convey rights of survivorship. However, joint tenancy does not treat the owners as a single unit. If you own entireties property with a spouse, you may not transfer your interest without your spouse’s permission because you own it as a unit.

In joint tenants, if one of the tenants want to transfer their interest in the property, he or she may do so at any time—and do not need the permission of the other tenant. This has led to some sticky situations, which is why tenants by the entirety is preferred in many situations.

If your parents own their home as tenants by the entireties or as joint tenants with rights of survivorship, the surviving spouse owns the home as a matter of law, and legally, ownership begins at the moment that first spouse dies.

Different states record this change of ownership differently, so you’ll need to speak with an estate planning attorney in your community (or the state where your parents lived, if it was different than where you live).

To notify the recorder’s office of the death, some state laws require the submission of a surviving spouse affidavit, which puts the recorder and the community on notice that one of the owners has died and the survivor now owns the home individually. Here again, an estate planning attorney will know the laws that apply in your situation.

There was a time when people recorded a death certificate, but this does not occur often. The affidavit makes a number of recitals that are important, and the recorded document proves the change of title.

In most cases, there is no need for a new deed, since the surviving spouse owns the property at the time of death, and the affidavit itself demonstrates proof of the transfer of title in lieu of a deed.

Reference: nwi.com (March 14, 2021) “Home ownership after the death of a spouse”