Many parents choose to name their children as beneficiaries in their wills, but some may worry that doing so means they are giving up ownership of their homes. However, this is not the case. If you name your child as the beneficiary of your home in your will, they do not have any right to your home while you are still alive. It’s important to understand why this is the case.
Title Is Key
As a homeowner, it’s crucial to understand the concept of title in real estate transactions. The person who holds the title to a property is the legal owner and has complete control over it. This means that you can sell, lease, mortgage, or refinance the property as you see fit. When you purchased your home, you received a deed that proves you are the rightful owner and have all the property rights.
A Will Is Effective Only upon Your Death
A will is a legal document specifying what happens to your property upon death. However, it is important to note that a will only comes into effect upon your death. This means that until then, it has no legal significance. It is also important to mention that a will does not change the ownership of your property during your lifetime. For instance, if you name your child as the beneficiary of your home in your will, they do not have any ownership rights to the property until after your death. Additionally, it is essential to understand that you can modify or rewrite your will at any time while you are still mentally capable of doing so. This means that your child cannot take ownership of your home while you are still alive.
A Word of Caution
Using a will to give your house to your child at your death guarantees that they will have to go through the probate process to complete the title transfer. To avoid probate, some people will put their child’s name on the deed to their home while they are living, with the intent of continuing to own the home while they are alive and passing the home to their child at the time of their death. As discussed above, title to property is received through a deed. If you put your child’s name on the deed to your home, they immediately become a co-owner. As a co-owner, they can do what any property owner has the right to do: lease, mortgage, refinance, etc. So, while naming your child in your will as the recipient of your home at your death does not give them the ability to take your home while you are still alive, putting your child’s name on the deed to your home would indeed give them–and their creditors–that ability.
If you want to ensure that you maintain control of your home while you are alive, that your child receives your home upon your death, and that they can avoid the probate process, there are estate planning tools such as a ladybird deed, a transfer-on-death deed, or a revocable living trust that can accomplish all of these goals. We are happy to meet with you to discuss your unique goals and how a tailored estate plan can help you meet them.