There is much confusion and misunderstanding that surrounds the issues of asset titling after the death of a spouse. Many surviving spouses are unaware that they can utilize the benefit of a Living Trust to avoid the financial and time frustrations of probate for their children, heirs or other estate beneficiaries. There is a two step process that our office takes on a routine basis for surviving spouses.
1. Clearing of Title: Because the deceased spouse’s name is still on the deed after his/her death, such name needs to be removed. This is commonly known as “clearing title” to the property which does not happen automatically because of a spouse’s death. We prepare and file an “Affidavit of Death” which is sworn to and signed by the surviving spouse. This document is filed and becomes part of the chain of title which demonstrates that the property is now owned solely by the surviving spouse.
2. Preparation of Living Trust and Transfer to Trust: Now that the title indicates that only the surviving spouse owns the property, we prepare a Living Trust and transfer the property by deed to the Trust. This act of transfer is necessary to avoid the pitfalls of probate. The surviving spouse continues to own the property as before, but title is held in his/her name as Trustee. This is the key- any property titled with the designation as Trustee avoids the probate process.
A surviving spouse who undertakes these simple steps saves their children or other heirs significant money in the form of probate costs in addition to up to a year of frustration and time for the property to clear probate. Here is the clincher- probate fees are assessed against the gross value of the property, not the equity. For example, if your house is valued at $500,000 and you have a $300,000 mortgage or debt against the home, your equity is $200,000. However, the statutory probate fees are assessed against the gross value of $500,000, as the mortgage is not taken into consideration.
If you have an interest in avoiding probate in your estate or simply wish additional information, contact our office for a complimentary consultation.