One goal of estate planning is to help your assets, including your home, pass to your chosen beneficiaries quickly and with minimal expense. In real estate, a common strategy to avoid probate (the court process of validating a will and distributing assets) is to add others to the title.
This strategy involves adding the names of your children or other beneficiaries to the deed for your property. Often, the purpose is to take advantage of rights of survivorship: when you pass away, ownership of the property transfers to the surviving co-owner(s) by operation of law, potentially bypassing probate.
Many people attempt to execute this strategy themselves, believing they can simply download a deed form from the internet or obtain a template from a book, complete it, and record it with the appropriate authority.
This approach can become costly. Deeds are complex legal instruments that must comply with state law to be valid. In most states, property will not pass to other owners listed in a deed without probate unless certain specific legal terms are used. In addition, many states have different rules and different forms of joint ownership with survivorship rights, so what works in one state may not work in another. Furthermore, adding others to your house title can have unintended consequences, including tax implications and the potential exposure of your home to someone else’s creditors.
The Risks of an Invalid Do-It-Yourself Deed
If the deed you create is defective or invalid, the property may not automatically pass to your intended heirs upon your death. The concerning part is that these issues often remain undiscovered until it’s too late. The consequences of an invalid DIY deed often don’t surface until after you’re gone—when they can no longer be easily corrected. Here are the most common issues:
- The Problem Is Found Too Late: If a mistake in the deed is discovered while you, the original owner, are still alive, it can usually be resolved by having an attorney prepare and record a corrective deed. Unfortunately, a defective or invalid deed is most often discovered after the owner dies, when they can no longer sign the necessary paperwork to correct it. If the problem can’t be fixed, the property will likely be forced into probate to clear the title and determine the legal owners.
- Probate Can Be Costly and Time-Consuming: Forcing the property into probate defeats the entire purpose of the DIY deed and results in the very outcome you tried to avoid. Probate can incur legal fees and court expenses, sometimes totaling thousands of dollars—far more than the cost of having an attorney prepare a valid deed in the first place. Until probate is finalized, heirs may be unable to access, maintain, or sell the property. This delay can span many months and, in some cases, years, causing significant financial hardship or missed opportunities for your beneficiaries, especially if the housing market changes substantially in the meantime.
- The Property Can Go to the Wrong Person: In a worst-case scenario, the property may be inherited under the state’s default intestacy laws (the rules for who inherits when there’s no valid will or title transfer mechanism). As a result, the property may be inherited by someone you intended to disinherit when you prepared and recorded your own deed.
Understanding the Legal Terminology of Deeds
A key reason DIY deeds fail is a misunderstanding of how various legal terms dictate property ownership. Simply adding a name to a deed is insufficient; the vesting (the legal status of the title) determines whether probate is avoided.
There are various forms of joint ownership across states, and some are available only to married couples. Common types of joint ownership include the following:
Tenants in Common
If you simply add another person’s name to a property deed, the law often defaults to “tenants in common.” In this case, each owner generally holds a distinct, divisible share of the property. When one owner dies, their share does not automatically pass to the co-owner. Instead, the deceased owner’s share must go through probate to be distributed according to their will (or intestacy laws if there’s no will), which defeats the goal of avoiding probate.
Joint Tenancy with Rights of Survivorship
Joint tenancy with rights of survivorship is a common form of property ownership intended to avoid probate between non-spouses. When one owner dies, their share automatically passes to the surviving owner(s) without probate. However, depending on the state’s rules, the deed must include specific language to create a joint tenancy with rights of survivorship. A DIY mistake can render this intention void.
Tenancy by the Entirety and Community Property with Rights of Survivorship
Tenancy by the entirety and community property with rights of survivorship are forms of joint ownership available only to married couples and only in certain states. Similar to joint tenancy with rights of survivorship, each option provides automatic survivorship to the spouse upon the other’s death, potentially avoiding probate. Where available, tenancy by the entirety can offer protection against creditors, while community property can offer other benefits.
California-Specific Considerations
California is a community property state, which affects how married couples hold title to real estate. California recognizes several forms of ownership, including community property, community property with right of survivorship, joint tenancy, and tenancy in common. Each has different implications for probate, taxes, and creditor protection. What’s valid and advisable in California may differ significantly from other states, making it especially important to work with an attorney familiar with California real estate law when structuring property ownership.
What Should You Consider?
Although adding a co-owner to a property deed can help avoid probate, it’s often not the best strategy. It can expose the property to the co-owner’s creditors, who can come from many sources—for example, claims by a divorcing spouse or tax liabilities. In addition, adding a co-owner can have tax and other consequences you may not anticipate.
Instead of a DIY deed, consider more robust, attorney-prepared solutions, such as properly prepared and implemented deed options or a revocable living trust.
If you want your home or other real estate to pass to your children or other beneficiaries without the costly delay of probate, relying on a generic, fill-in-the-blank form carries significant risks. Deeds are state-specific legal documents with very particular requirements. A real estate deed that’s perfectly valid in one state may be completely invalid in another.
Investing in professional preparation now can help avoid costly mistakes later and increase the likelihood that the deed will be legally valid and that your property will pass to your intended heirs.
Book Your Introductory Meeting Today
If you’re considering how to structure your real estate holdings to avoid probate, we can help you understand your options and potential risks.
Meet with our team for 30 minutes to discuss your estate planning, trust administration, or probate needs. We’ll help you understand if we’re the right fit for your situation.
Ready to get started? Call us at (650) 325-8276 or complete our online contact form to schedule your meeting.
