Many Husbands and Wives own title to their home as “Tenants by the Entirety” or as “Joint Tenants with Rights of Survivorship.”  Often they’ve been told that it’s a cheap and easy way to avoid probate and are shocked to discover that it doesn’t.  The catch here is that rights of survivorship—whether through Tenants by the Entirety or by Joint Tenancy—only delay probate until the death of the survivor.  When the first spouse passes away, the survivor can usually have the title changed into his or her name without probate and without too much hassle.  If the property is recorded in the regular system, you don’t really have to do anything.  However, if the property is recorded in the Land Court System, you still do have to file a Land Court Petition to note the death of the first spouse and request that the State reflects this change on the Transfer Certificate of Title.  Nevertheless, it’s relatively painless to do a Land Court Petition.

The real problem arises when the surviving spouse also passes away and then a probate will be required regardless of whether it’s Land Court property or Regular System property.  Many couples try to avoid this probate by adding a child as a joint tenant on the property.  We almost never recommend doing this for several reasons:

First, it exposes your property to your child’s liabilities. If your child were to get sued or go through financial hardship, you could lose your property to your child’s creditors.

Second, you can’t change your mind about whom you want to leave it to. If your child starts to neglect you and you then want to leave it to another child or a charity, you can’t just take the property back and give it to anyone else. You’ve already given half of it away.

Third, there are some huge capital gains tax benefits you could miss out on by giving half of it to your child during your lifetime.

Fourth, it doesn’t protect your home if you ever need to go into long term care and get the State to pay for it with Medicaid funds.  They will still put a Medicaid lien on your home.

Finally, there’s always the remote possibility that your child could pass away before you, in which case, you’re right back where you started. There will be a probate when you pass away.

There are two great solutions to help you avoid probate for your home.  The first is very simple and is called a Revocable Transfer on Death Deed. It allows you to name a beneficiary who will inherit your property at your death without probate, but you haven’t given anything away yet and you can always change your mind and revoke or cancel that deed until you pass away or become mentally incapacitated.

The second great way to avoid probate that gives you more options is to use a trust.  Some of the additional options are setting the trust up to protect the property from your beneficiary’s creditors.  In other words, if you’re leaving your home to your spouse or your children, you can set up the trust so that nobody can take it away from them even if that person wins a lawsuit against your beneficiary or gets divorced.  They can live there the rest of their lives if they want, or have the trustee sell the home and buy a replacement house, or use the money to pay for them to rent a place—whatever they want.

Whether you use a revocable trust or an irrevocable trust depends on a few factors.  If you want to keep the right to sell it or mortgage it and use the money for yourself, a revocable trust is appropriate.  If you want to protect it from future nursing home costs or other creditors, an irrevocable trust is probably the best option for you.

Be very careful when choosing a lawyer to help you set up your estate plan.  If they are not experts in the field, they might accidentally mislead you.  Our office has reviewed many estate plans by other lawyers and often it does not do what the previous lawyer told the client it would.  We have seen irrevocable trusts that are supposed to prepare the clients for future Medicaid qualification, but they weren’t prepared correctly.  We have seen clients who thought that their regular revocable trust should protect them from creditors, but that is never the case.  Whatever your estate planning needs, concerns, or problems might be, we have a solution for you.