Making a plan for your home.

Estate planning is not a topic that anybody wants to address, but it’s one that should be addressed. Just as it’s important to create a plan for your possessions should you pass, it’s important to create a plan for your home. Planning for your home in the case of incapacitation or death is the only way to ensure that your property passes to your intended recipient smoothly.

Homes are important financial assets; the value of real estate typically appreciates over time. Passing your home down to loved ones builds generational wealth and helps facilitate long-term housing for future generations. Without proper planning, your home could go into probate after you pass, which is a potentially costly and lengthy procedure for beneficiaries to gain legal ownership of the property.

There are several ways to make a long-term plan for your home in the state of Tennessee. Below, we outline a few of these methods. 

Willing your home.

Wills are a document to help make sure that your property goes to the intended recipient after your death. A will is not legally required for property to pass to your loved ones. But without a will, state laws determine the distribution of an estate's assets, which may not match your intentions for the property. 

Although wills must be confirmed in a probate court before going into effect, having one helps speed up the process and helps prevent the property from becoming fully probate. To will your property in Tennessee, you must create a hard copy of a will, designate the proper witnesses, executors, and beneficiaries, then sign it. Ensuring you designate one beneficiary is important, as your property could pass equally to multiple children without a clear beneficiary, leaving them with tough decisions to make after you pass. Although certain circumstances make wills more complicated, they are generally an accessible way to help make sure your property is passed down to your intended recipients.

Living trusts.

Living trusts are similar to wills in that you create a document to pass the property to an intended person. In the case of living trusts, the document is called a trust document and it significantly decreases the possibility of a property becoming probate. To make a valid trust document you must create it in accordance with state laws, name your intended successor within the document, then properly transfer ownership of your assets (the property) to the trust. 

While Tennessee does not require an attorney to make a living trust, it is beneficial to get professional input because living trusts can be complicated. Additionally, unlike wills, living trusts must be notarized. 

Joint ownership. 

Joint ownership allows a property to pass directly to the surviving owner when the other owner passes. Joint ownership requires proof of paperwork, but the property does not need to pass through probate with this method. 

There are two types of joint ownership in Tennessee: Joint tenancy and tenancy by the entirety. Joint tenancy can be held by non-married or married couples and requires that the pair each have equal ownership of the property in life. Tenancy by the entirety is for married couples only and recognizes the couple as a singular unit. 

Although joint tenancy is an effective way to avoid probate, it does require that you gift half of your legal rights on the property to another person if you are the sole owner. Therefore, it is important that the joint ownership is in a trusted individual’s name. 

Navigating heirship and planning for your estate can feel overwhelming but preparing in advance can help make sure that your loved ones and your home are taken care of. For more information on property ownership in general, check out our blogs or attend one of our homebuyer education courses

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