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What Happens to Real Estate After you Die?

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By: Janice Dantes

 

A home purchase is probably the single most expensive purchase a person can make during their lifetime. I think most people here in the United States would have gone through the process of purchasing a property at least one time in their lives. While homeownership is a goal many people strive for, you cannot take your house with you when you die. So, what do you do with it? Below are the ways you can deal with real estate before you pass away.

1. Joint ownership. Most people with property own it with another person (e.g. your spouse). In cases like this, the property is usually owned as tenants by the entirety or as joint tenants with rights of survivorship. This means, when one joint owner passes away, the property passes to the other joint owner. Joint ownership is a great tool for estate planning. However, it becomes complicated if the relationship with the other joint owner breaks down. For example, divorce can lead to complicated divisions of real estate. Owning property with a boyfriend/girlfriend, sibling, or friend can lead to a partition lawsuit if you and the other person do not agree on how it should be divided. Also, if the other owner accumulates debts, those may attach to the home. Be careful who you choose to jointly own property with.

2. Trusts. If you do not jointly own a property but would like to make sure it passes to the person you would like it to pass to, you can place the home in trust. There are many different kinds of trusts including revocable living trusts, irrevocable trusts, and land trusts. Each has their pros and cons. Speak with an attorney to determine what kind of trust would work best for your goals.

3. Transfer on Death Instrument. This is a relatively new way to handle property after death that is available in Illinois but not in every state. The mechanism is similar to a trust in that a property can be transferred after death directly to a beneficiary without probate. This is a great option for people with modest estates with one property.

4. Will. In a will, you can state who will be the recipient of your property. However, with a will, a case in probate court will likely have to be open which incurs additional expenses to your estate, including court fees and attorney’s fees. Handling real estate in probate can also take a long time especially if the property has to be sold.

5. Doing Nothing. Doing nothing is also an option but it removes any control you have with your property. Without a will, also known as intestacy, an estate passes 50% to children and 50% to the spouse. If there are no children or a spouse, the property will go to next of kin. While many times, this is the preferred division, there can be conflict with a new spouse and adult children. The property could also go to a relative you did not want to receive anything. Also, conflicts among relatives can lead to fighting that could use up the value of your real estate.

6. Property in the Philippines. Property is related to the jurisdiction where the property is located. Further, Philippine law has differences from state and federal laws here in the United States. While you may have writing in a will or trust that property in the Philippines has to give to particular individual, the court in the United States cannot enforce a writing in a different country. If you need to handle property in the Philippines, be sure that any documents are reviewed by an attorney in the Philippines and recognized there. If you have any questions about handling your property, please contact me at (312) 546-5077 or janice@pinaylaw.com. Thank you for reading. Until we meet again, love one another.

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