If your sole goal is to avoid probate in your estate plan, I might tell you to be careful what you wish for. Based on stories that may have been blown out of proportion, it seems like everyone has a desire to stay away from probate. I think the better approach is to find out what’s the most simple way to accomplish the objective. Many people will say that they want to transfer their house to their kids equally outside of probate. At first glance, that seems like a good plan. However, there are some things that most people do not understand.
Ohio has a transfer on death (TOD) designation for real estate. People have to understand a few things when they use the TOD. First, for any person who is married at the time they would inherit under the TOD, that person’s spouse would have to sign the deed to the next owner. Let’s say Paul and Suzy want to leave their home in Hudson to their kids Johnny, Mary and Timmy. When Paul and Suzy die, Timmy is in the midst of a messy divorce. The siblings have a buyer for the home. But because of something that Timmy did, Timmy’s wife won’t sign the deed to sell the house. The siblings are stuck paying the expenses on this house and can’t sell until Timmy’s divorce is final. The family avoided probate. But guess what…now they have a problem that probate can’t solve.
There’s also another risk with that TOD for real estate in Ohio. When the owner dies, the homeowner’s insurance coverage on the house ends. So if the house burns down in the time before the family members call to get a new insurance policy, there is no coverage. What if someone breaks in to the home while everyone is at the funeral? No coverage. What if the furnace breaks during a winter cold spell, pipes burst and cause a lot of water damage. Guess what? No coverage. If the house had gone through probate, then the deceased owner’s coverage would have extended to the executor.
Be sure to talk with an attorney to truly accomplish your estate planning objectives.
If you’re ready to quit worrying and get started, click here or call 330-421-6861.