The Story of Two Friends (Part 1)


Myth Buster: My House Will Have to Go Through Probate When I Die

Robert and Phil are brothers. Both are married and have 3 children. Both own a home worth about $150,000 and both have about $125,000 in savings. 

Robert and Phil died within 3 months of each other. 

Elizabeth, Robert’s widow and Marge, Phil’s widow got together about 3 months after Phil’s death. 

Elizabeth was confused and unsure what to do next. “I figured that since we were married, everything would be taken care of after Robert died. But I’m spending hours a day trying to get everything figured out. I couldn’t believe it when I found out that I had to go to court to get our house put in my name. How did you handle it all?”

Marge was a bit unsure how to respond. Her experience was nothing like Elizabeth’s. 

It turned out that Elizabeth had hired an attorney, spent thousands of dollars and now, six months after her husband’s death, it looked like the process was just winding down.

Marge’s experience after Phil’s death was quite different than Elizabeth’s experience after her husband died. Although she did hire an attorney to make sure she didn’t miss anything, she spent hundreds and not thousands. And settling her husband’s affairs had taken about a month instead of six.

Why the disparity between Marge’s and Elizabeth’s experiences after their husbands’ deaths?

The difference came down to planning. Both Marge and Elizabeth grieved. But during the grieving process, Elizabeth was embroiled in months of unnecessary hassle and spent thousands of dollars in fees because her and her husband hadn’t spent a little time and money putting a plan in place while they were able. Remember, Probate Courts oversee the administration of a deceased person’s estate. By keeping your house out of your estate you can avoid probate.

What about Joint Ownership with a Right of Survivorship? Will that avoid Probate?
 
When Marge and Phil purchased their home 10 years before Phil’s death, they both signed a deed that included their names, “Philip C. Black and Marge E. Black, a married couple.” 

About a year before Phil’s death, Marge and Phil went to their attorney’s office to review their estate plan and were informed that their deed was not a “Survivorship Deed.” Their attorney explained that a Survivorship Deed must include some “magic language” in addition to their names: “Philip C. Black and Marge E. Black, a married couple, and to the survivor of them.” 

Unfortunately, without the magic language “and to the survivor of them”, when one spouse passes away, the other does not automatically receive ownership of the deceased spouse’s part of the property. If that language is included, as it was in Marge and Phil’s deed, the surviving spouse receives the property without probate court intervention. A simple document called an Affidavit of Surviving Spouse must be filed with the county recorder, and the surviving spouse is recorded as the sole owner of the property.

The deed for Elizabeth and Robert’s home was either owned by Robert alone or it was owned by both spouses, and the deed did not include survivorship language. In either case, Elizabeth’s only recourse was to ask the probate court to transfer the property into her name alone. 

Any time a court is involved in any process, there are going to be delays and significant expenses. We won’t get into the intricacies of probate here—they’d require a 500 page book. The important thing to note is that the 6 or so words were of survivorship language missing from Elizabeth’s deed cost her thousands of dollars and 6 months of unnecessary stress. 

But what about the couples’ bank accounts? 

As with a home, joint ownership with a right of survivorship prevents a bank or investment account from passing through probate as long as the other joint owner survives the other owner.

This section is titled “Joint Ownership with a Right of Survivorship Avoids Probate… Sometimes” because of the final clause in that last sentence. If neither joint owner is alive, the survivorship language does nothing, and the property will become part of one (or both) of the joint owners’ probate estates. That’s the downside to joint ownership with a right of survivorship. It only avoids probate for so long. 

If this story brings up uncertainty whether your or your loved one's estate planning is adequate, give us a call and schedule a time to sit down with one of our attorneys for an honest, no-cost assessment. We can be reached at info@sovelaw.com or 937-985-1843.