Why Is My Estate in Probate?
The two ways to settle an estate in America are with a Living Trust or thru the Probate court systems. Research shows that less than 10% of the population has a fully vested Living Trust. Generally the biggest asset in an estate is real estate. How title is held will determine if a home will end up in Probate, i.e. married couples both names on title will stay out of probate and go to the living spouse. On the other hand if only one person’s name is on title, and no trust has been established, the home will end up at the probate courts. Even if there is a Will.
Probate can be expensive and can take up to a year to complete. In addition to the court costs there are attorney’s fees and the executor handling the process is entitled to the same amount as an attorney. These fees are based on the size of the estate as follows:
- 4% on the first $100,000
- 3% on the next $100,000
- 2% on the next $800,000
Let’s say a house is valued at $750,000, the combined representative’s fee and attorney’s fee for probate would be $36,000.
Recovable Transfer on Death Deed
For anyone whose estate consists primarily of the home, the money to establish a trust may be unaffordable. Another alternative to keep your home out of the Probate Court is to file a Revocable Transfer on Death Deed.
Assembly Bill 139 which became effective in 2016, creates the revocable transfer on death (TOD) deed which would transfer to a named beneficiary 1 to 4 residential real property on the death of its owner without a probate proceeding or a living trust.
The Revocable Transfer on Death Deed is the most simple and inexpensive transfer mechanism on the market today. Furthermore, it may be the only tool available to unmarried homeowners who wish to leave their property to a lifelong partner, family member, friend, or loved one upon death. .
The deed has no effect until a person dies, and can be revoked at any time. The revocable TOD deed must be signed, dated and acknowledged before a notary public, and must be recorded within 60 days after execution.
Bottom line to keep your home out of Probate, you will need a Trust or the Transfer on Death Deed. If you have more assets than just the home, it is advisable to establish the trust, otherwise everything will have to be probated.