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A common misconception I often hear is that an individual having signed a last will and testament will avoid probate in its entirety. A will is simply a vehicle that sets forth directions as to the distribution of the decedent's property upon death. Just because a will grants an individual the decedent's real property, does not mean the probate process is not necessary. Whether property passes through probate depends on how the property is titled. The following are just a few ways property can be titled to avoid probate with respect to real estate and without the use of a trust.
1. Joint Tenancy with Rights of Survivorship (JTROS)
CREATION: When two or more individuals own property a common way to avoid probate is to obtain title as joint tenants with rights of survivorship. This type of property ownership must contain specific "language that shows a clear intent to create a survivorship tenancy." The following is an example of the requisite words necessary to evidence the proper intent; Thomas C. Grantor, unmarried, of Butler County, Ohio for valuable consideration paid, grants, with General Warranty Covenants to John A. Doe and Jane B. Doe, husband and wife, for their joint lives, remainder to the survivor of them.
ADVANTAGES: This type of property ownership will avoid probate upon the death of one of the owners. Each "tenant" or owner owns an equal interest in the property and the survivor among them obtains the entire property immediately upon decedent's death and following the filing of a survivorship affidavit. This type of tenancy is very common for when a husband and wife purchase property together.
For example, Husband and Wife bought their first home together and the deed had the JTROS language. Subsequently, Husband suddenly passed away. Wife does not need to open an estate to transfer the home into her sole name but need only file a survivorship affidavit with the recorder's office.
PROBLEMS: Typically this type of ownership can cause problems between unmarried couples, unrelated parties, or blended families. This is because each joint tenant CANNOT devise their interest upon death through a last will and testament. For example, Boyfriend and Girlfriend buy a house together and the deed has the JTROS language. If Boyfriend were to die, his family will not receive his interest in the real estate since it is a non-probate asset. Girlfriend will take the entire property into her name upon the filing of a survivorship affidavit.
Just as equally troubling is when more than two owners obtain title through JTROS. If three brothers obtain a piece of real property and the JTROS language is present, they each have an equal interest in the property. However, when brother 3 dies, brothers 1 & 2 then receive brother 3's interest. Thereafter, when brother 2 dies, brother 1 obtains absolute title to the property and brothers 2 & 3 family get nothing.
Finally, if both owners die simultaneously probate will still be necessary.
2. Transfer on Death Designation Another way real property can avoid probate is to file a transfer on death designation naming who will receive the property upon your death.
ADVANTAGES: This is a really effective way to transfer property outside of probate where one individual owns the property. It is akin to a transfer on death checking account except it is for real estate. The designee must simply file an affidavit with the recorder to obtain the property. No court involvement is necessary. Additionally, at anytime this type of designation is revocable if the owner changes his/her mind.
PROBLEMS: There are but a few downfalls with this method but it must be discussed. For starters, it will be public record who your beneficiary or beneficiaries are so there is no privacy in this type of transfer. Also it is possible to disinherit individually quite easily in this method so proper planning is required. Only the beneficiaries who are living at the time of death will take the property so future grandkids may get frozen out of inheritance.
Joseph M. Braun is an attorney in Hamilton, Ohio. He specializes in estate planning, probate, real estate, adoption law, and other general practice areas. You can connect with him by emailing: jbraun@braunlawoffice.com or liking him on Facebook