Probate can be an expensive and difficult process for many Michigan residents. The probate process often leeches value from many inherited assets. However, when inheritance involves only real estate, there are many ways to avoid probate and its negative effects.
One of the best ways to avoid probate on real estate and other types of assets is to put those assets into a living trust. A living trust guides the transfer of assets from the trust creator to a beneficiary while still allowing the grantor to retain control of the assets during their lifetime. This is very useful for property, such as a house, because it allows the house to be given to a beneficiary after the grantor's death without relinquishing ownership of the house before that time.
Besides a trust, there are a few other ways to ensure real estate does not enter probate. One ways is to add the intended beneficiary onto the title of the property and make them a co-owner with a right of survivorship. This means that when one owner dies, the other owner retains full ownership. The downside of this approach is that the beneficiary will have legal rights as a co-owner and may decide to exercise those rights, such as a forcing a sale of the property, while both owners are still living. Likewise, simply gifting a high-value property may trigger certain gift taxes that could end up costing as much or more than probate.
Deciding what to do with inheritance can be complicated. Before making decisions about creating trusts, changing deeds or transferring property, it may be important to consult with an attorney about the legal consequences of all actions. An attorney could assist a client by advising them of these consequences and then helping them draft the documents necessary to alter a deed or create a living trust.
Source: SF Gate, "How to Avoid Probate When Real Estate Is the Only Asset to Transfer?" Joe Stone, accessed on Jan. 18, 2015