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Revocable Living Trust Preferred over Transfer Deeds, Will

Question:  At the time my husband died five years ago we jointly owned our home in Arizona, plus a rental home in California and 160 acres of land in Montana.  I then became the sole owner of these three properties. I am not in good health now, and I have drafted deeds to these properties to be delivered to my two sons.  My sister says that I should not sign and give these deeds to my two sons, but that I should transfer the three properties to my two sons in a will.  Do you have any suggestions?

Answer:  If you deed these three properties to your two sons now, there will probably be be some significant tax owed when your two sons sell the three properties.  A better course of action would be to transfer these three properties into a revocable living trust with your two sons as beneficiaries.  The trustee of this revocable living trust would be you, and you would have the benefit of ownership of the three properties during your remaining lifetime. Upon your death the properties would be owned by your two sons.

You should not execute a will, which could require the time and expense of probate after your death and could require ancillary probate proceedings of the will in California for the rental home and in Montana for the 160 acres of land.

Note: You could consider executing and recording beneficiary deeds of these three properties to your two sons.  These beneficiary deeds would only transfer the title of these three properties to your two sons upon your death.  In California, however, a beneficiary deed is called a “transfer on death deed.”

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