Estate Planning: You Can Avoid Probate by Adding Your Heirs to Title. But Should You?

These days, buying real estate in California seems truly out of reach for most people, so if you actually own a home or rental property you want to make very wise decisions, both for yourself, and for your legacy. When it comes to estate planning, protecting your heirs from probate is essential. This court process is costly, time-consuming, and emotionally draining for your loved ones. Thankfully, there are strategies to ensure your heirs inherit your property smoothly. The two most popular options: placing the property in a living trust or adding heirs to the title. While both bypass probate, the differences between them are significant.

A living trust is the gold standard for avoiding probate. It offers control, clarity, and flexibility. With a living trust, you maintain full ownership during your lifetime, and when the time comes, the transfer to heirs happens seamlessly. Plus, your heirs may benefit from a step-up in basis, potentially reducing capital gains taxes significantly if they decide to sell the property. Admittedly, creating a living trust is more expensive on the front end, but the long-term advantages often far outweigh the initial investment.

Adding heirs to the property's title, on the other hand, is a cheaper and quicker alternative. With just a signature, you ensure they’ll inherit your property directly and avoid probate entirely. However, this approach isn’t without risks. Establishing partial ownership could expose your property to their personal financial troubles, lawsuits, or even divorce settlements while you're still alive! And there’s one other significant drawback—one that even a living trust doesn't solve. I explain that in today's video.

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