Probate Avoidance Basics....Real Estate (Ohio and Florida are not the same)
When I ask non-lawyers about their experience with the "probate process", most tell me that they wish it could have been avoided. Let's talk about real estate and some differences between Ohio and Florida and some probate avoidance options along with some other considerations...
Did you know that different states handle real estate differently? This doesn’t mean you shouldn’t plan for it!
If you are a resident of one state, but have a real property interest in another, that other state's requirements may need to be followed to ensure your estate planning goals are met – and met efficiently. Take this example (follow link).
Real Estate Probate Avoidance in Ohio:
In Ohio, options to avoid probate for real estate include (but are not limited to):
Survivorship Deed - A Survivorship Deed avoids probate unless the last owner (survivorship tenant) has passed away, then probate is not avoided for that last owner who owns a 100% interest in the property. That last surviving owner (survivor tenant) may want to consider a TOD designation upon the death of all owners.
Take note that if there is at least one other surviving owner (living survivorship tenant) in a survivorship tenancy, then the remaining living owners will be the owners of the whole, where the deceased owner's interest would terminate upon death - i.e. that interest can not be devised, etc.
The last surviving survivorship tenant has the highest risk of being subject to probate if no further steps are taken [see below];
Transfer on Death (TOD) Designation - A TOD Designation directs where the property goes upon the death of the owner(s) (or death of the last owner). A TOD does not transfer title until the death of the owner(s) (or last owner). Generally speaking, a TOD can be revoked and changed up until death. The owner of the property has all rights in the property (as a TOD designation changes none of the rights an owner of real property has) - i.e. the owner can sell and encumber the property without restraint. A TOD only relates to specific property and as such, a new TOD should be considered upon acquiring additional property. Furthermore, should title be changed on a particular piece of property (i.e. adding an owner or creating a survivorship tenancy), a new TOD designation should be considered. To be valid, a TOD must be recorded even though no title is changed until death pursuant to the instrument; and/or
Trust - There are many flavors of revocable and irrevocable trusts (as there are many different purposes), however most can hold real estate and may include several (even unique or specialized) trust provisions (i.e. "terms and conditions") specifically related to real property.
In Florida, options to avoid probate for real estate include (but are not limited to):
Entireties Property (Acquired by Marriage - Married upon death of first Spouse) - If property is acquired during the marriage, and in both spouses' names, then it is presumed to be entireties property (as with all presumptions, this can be overcome if there is enough evidence to rebut that presumption - but that is for another discussion). With entireties property, the surviving spouse (after completing a Affidavit of Continuous Marriage confirming a few facts) will be able to acquire the deceased spouse's interest in the property. Probate is not avoided if the property is only acquired in the deceased spouse's name - and not otherwise converted to entireties property. Further, even if the property is entireties property, that does not avoid probate upon the death of the surviving spouse;
Survivorship Deed - [Similar to the description under Ohio law - but explained a little differently to further explain it] - If at least one survivorship tenant survives the death of another survivorship tenant, then probate is avoided - at that time. Again, the interest of a deceased survivorship tenant, where at least another survivorship tenant survives, terminates upon death. If a survivorship tenant passes away with at least one other survivorship tenant alive, then title is held in the name of surviving survivorship tenant(s). However, probate is not avoided upon the death of the last survivorship tenant. Another option should be considered (below);
Enhanced Life Estate Deed ("Lady Bird Deed") - Florida does not recognize a "Transfer on Death Designation" like several other states do. A Substantive equivalent in Florida is a "Lady Bird Deed." A Lady Bird Deed transfers the real estate by deed but the grantor reserves an "enhanced life estate." The grantor under such an instrument would have enhanced powers that a regular deed or life estate wouldn't have, such as full power to sell, transfer, mortgage, lease, etc. without requiring the permission of the remainder beneficiary. Upon the death of the grantor, title to the property can easily be transferred to the beneficiary.
Examples of a Survivorship Deed:
Example: Property is conveyed to a husband and wife as joint tenants with rights of survivorship (i.e. language is in the deed, such as "for their joint lives, remainder to the survivor of them"). The wife passes away. As a result of the survivorship tenancy, the husband is the sole owner of the property. Husband may want to consider probate avoidance techniques for when he passes away.
Example: Property is conveyed to 3 siblings as joint tenants with rights of survivorship (i.e. language in the deed such as "for their joint lives, remainder to the survivor of them"). Upon the death of sibling 1, property is exclusively in the name of the other 2 siblings (the deceased sibling - and his/her heirs have no interest). Upon the death of sibling 2, property is exclusively in the name of the surviving sibling (the other 2 siblings - and their heirs - have no interest). The last surviving sibling may want to consider steps to avoid probate.
Even though property may be established in survivorship, there are legal ways to "sever" the joint tenancy. Contact a lawyer to discuss your specific situation.
Note - should there be an inconsistency between any (recorded, signed, and executed) real estate designations (such as the above) and a Will/Trust, then the properly executed and recorded instrument (with the designations, etc.) will control.
Further note - if a remainder beneficiary (i.e. TOD or Lady Bird) is a Trust, the provisions of the trust may be properly amended (pursuant to law and the provisions of said trust) without the need to record a new instrument with the recorder.
When there are several jurisdictions involved, understand that your residential jurisdiction may not treat real estate the same way as the jurisdiction where your other property is located. This has the potential to cause major (administratve) headaches for your estate beneficiaries - especially if probate is needed in one or more jurisdictions.
Contact me to discuss your Ohio and/or Florida real estate issues/goals/concerns/questions and how they relate to your comprehensive estate planning goals.