You Can Transfer Your Real Estate Without Probate
Often the most important asset that a person owns is their home. A significant change in the law effective April 10, 2006, created the ability to name a beneficiary to own real estate after the current owner dies. Previously, the methods of transferring real estate after the owner's death were through probate, a living trust or a conveyance of a remainder interest prior to death.
Section 705.15 of the Wisconsin Statutes makes it possible for the current owner of real estate to record a document which designates that the real estate will transfer on death to the named beneficiary. The recording of such a document does not change the current ownership, and the identified beneficiary acquires no current rights in the property. Therefore, the current owner can still sell or mortgage the property without having to obtain the consent of the beneficiary, or having to give some portion of the sale proceeds to the beneficiary. The identity of the beneficiary can also be changed by recording a subsequent document, naming a different beneficiary.
This differs substantially from the previous method of designating a remainder owner while retaining a life estate. The transfer of a remainder interest is a current conveyance and gives some ownership rights to the holder of the remainder interest. The property cannot, thereafter, be sold without the consent of the holder of the remainder interest and the proceeds of sale would be split between the life estate owner and the holder of the remainder interest.
For example, many parents have wanted to insure that their children will get their home after the parents die. Previously, the parents needed to either deed the entire house to the children, depending upon the children to allow them to continue to live in the house, or deed a remainder interest to the children, retaining a life estate. Both of those methods had their risks and rewards, but always resulted in a loss of complete control by the parents and often created a penalty period for purposes of eligibility for medical assistance.
The statute allows the parents to name the children as beneficiary of their house, without losing any of the current rights of the parent, and still insuring a transfer of the real estate to the children at death, without probate. The statute even provides that if one of the children should die before the parent, the deceased child's children would take the share of the deceased child, thus protecting the grandchildren.
Like all procedures, however, there are some limitations. For example, the designation of a beneficiary at death, because it does not change ownership until death, does not prevent the value of the house from being available to pay nursing home costs, or other creditors. Although the statute provides for the descendants of the named beneficiary, it does not provide for any other intended beneficiary, such as a daughter-in-law. Also, if the beneficiaries are minors or having financial problems, there can be additional complications. Therefore, there are still circumstances in which other procedures will be appropriate.
The most effective estate plan requires an analysis of each individual's situation and the selection of the proper techniques for that individual's needs. The procedures that are best for one individual are not necessarily best for another.