When you own a vacation home or second home, you may want to keep it in the family by leaving it to your relatives. To make this happen in the least expensive and most efficient way, you should do some estate planning now. First figure out who owns the home now, and then determine (with the help of a lawyer) the best method of transferring ownership.
Property Ownership and Estate Planning
If you own the vacation or second home by yourself outright, or even with a mortgage, then skip this section. But if you share ownership of the home with your spouse or relatives, or you have a timeshare, then you need to check who owns the house before you make an estate plan.
When people own property by a joint tenancy and one owner dies, the surviving owner will have full ownership of the property. This means that the deceased owner cannot pass on his interest in the property using a will or a trust. There is a similar result if the owners are married, live in California, purchased the home during their marriage, and specified a right of survivorship in the deed – the home is community property. The deceased owner cannot give away all rights to the house because his spouse owns part of it too.
As a result, you need to understand how you own the vacation or second home at the outset of estate planning. Then your lawyer can discuss options for passing it on to relatives that account for the specific ownership situation.
Estate Planning Options
There are a few ways you can leave your second home to children or relatives. If only you own the home, you can leave it to someone in your will. A will is a document describing how all of your assets should be distributed after your death. As discussed above, you usually cannot give away a jointly owned home in your will. Also, some wills must go through probate court before property gets distributed. In California, this can cost the estate thousands of dollars. Without a will, though, the probate process can be more complicated and more expensive.
If you have a joint tenancy or if the home is community property, consider forming a trust. A trust holds the property for beneficiaries sometime in the future. You choose a trustee to monitor the property, take care of upkeep, and pass it on to the beneficiaries after you pass away. Depending on the type of trust, you may maintain control over the vacation home during your lifetime.
Finally, some vacation home owners choose to use transfer on death deeds. A revocable transfer on death deed allows your chosen recipient to nearly automatically receive title to the home after you pass away. You maintain control over the home during your lifetime. Transfer on death deeds do not work for homes owned by joint tenancy or as community property unless both owners execute deeds naming the same beneficiaries.
Planning your estate? Angela Klenk, Esq. and the team at Beach Cities Estate Law couple personalized attention to your estate plan with big law firm experience for a winning combination to give you peace of mind. To schedule a case evaluation, visit Beach Cities Estate Law online or call Angela’s office at (424) 400-2125.