Real estate property is likely one of the biggest assets you possess. What happens to your home after you pass away depends on various factors. There are many ways to ensure your home goes to your desired beneficiaries with a comprehensive estate plan. Below, we discuss the different scenarios of what happens to your home after you pass away.
In a will, you can name a specific beneficiary who you would like to inherit your home or other real estate property. However, the beneficiary will not be entitled to the property deed until probate proceedings conclude. During probate, the entire estate is valued, and debts are paid. As long as the home did not need to be sold to pay off estate debt, the property will go to the beneficiary you named in your will.
When you pass away intestate (without a will), Florida’s intestate laws determine who is eligible to receive your assets, including any real estate property you own. The estate will go through probate just as it would if you had a will, but the intestate line of succession will specify who is entitled to the asset. The intestate line of succession is as follows:
- Surviving spouse
- Children and grandchildren
- Siblings and their families (including nieces and nephews)
- Blood relatives
- The state
Mortgage debt is handled differently than other estate and consumer debt after you pass away. While debts from things like credit cards are paid off from the entire estate’s value, a mortgage is not required to be paid off when the person who owns it dies. Who is responsible for the mortgage varies depending on the mortgage type and what will be done with the property.
If you had a co-signer on the mortgage, that person is responsible for making payments. If you named a beneficiary in your will to inherit your home, your beneficiary would be responsible for taking over the mortgage once the probate process is complete. If no one desires to own the house, your beneficiaries may sell it and place the profit into the estate bank account. In the meantime, your estate’s personal representative (executor) is responsible for ensuring mortgage payments are made. If the personal representative fails to make payments or no one takes over the mortgage, the bank will foreclose on the home.
During probate, your entire estate value is assessed (including the value of your home). After the formal notice of administration, the personal representative will notify any known creditors that the estate is in probate. Creditors have 90 days to file claims. These claims are paid from the value of the estate. If your debts equal or exceed the value of your home, it may be sold to pay off the debts.
An enhanced life estate deed (also called a Lady Bird Deed) allows you to automatically transfer property to a named beneficiary without going through probate or placing the property in a trust. These deeds give property owners complete ownership rights while alive.
Placing real estate assets in a trust is a common way to avoid probate. With a trust, a trustee manages the distribution of assets to named beneficiaries.
To ensure your primary residence or other real estate property is transferred to your desired beneficiaries efficiently, you will want to create a complete estate plan. What happens to your home after you pass away depends on a well-formed estate plan. Call our office at 407-710-0461 to speak with the estate planning attorneys at the Boutty Law Firm. We handle the estate planning needs of Winter Park, Orlando, and Central Florida residents.