Listen to Lawrence Letter: What happens to my Real Estate after I’m gone?
May 4, 2021
CLIENT QUESTION:
Wonderful and informative emails, finally emails I read! Thank you for your Listen to Lawrence Letters.
Maybe you can answer this or even a simplified version of my question.
1) If the surviving spouse has a revocable trust that is funded with four single-family homes which are a) titled in the same name of the trust OR 2) titled in personal name/not held in the trust, what legally has to happen when that spouse dies and the named beneficiaries inherit them? What legally has to happen if there is a mortgage, or not, attached to the house?
2) Do the beneficiaries have an opportunity to continue ownership, assuming they all have the resources to pay for continued expenses, in both scenarios?
Thank you, Lawrence!
MY RESPONSE:
First, thank you for your kind words.
I think your question boils down to this, what happens to your real estate when you die, whether it’s owned by your trust or you personally?
If your real estate is owned by a trust, we first must read the trust to see what instructions lie within. Depending upon what the trust may say, the trustee will likely have the authority to EITHER sell the property and distribute the cash or can simply sign a new deed transferring the property from the trust to the beneficiaries named in the trust agreement.
If your real estate is owned by you personally, we must first read the last Will and Testament to again see what instructions it contains. The Will will then generally be probated, giving the executor authority to EITHER sell the property and distribute the proceeds or sign a new deed transferring the property from your estate to the beneficiaries named in the Will.
Whether the real estate gets sold or distributed can be spelled out in the trust or Will or left to the discretion of the trustee, upon consultation with the beneficiaries. In other words, tell us what you want to see happen and we can prepare your documents to make it work.
In either case, if the beneficiaries take ownership of the real estate, they will do so subject to any mortgage still encumbering the property. They must then continue to make the mortgage payments. DARN!
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