Why is it important to change a deed after someone has died if taxes are still paid?

Unfortunately in my work I run across situations where there is a not a good understanding of the implications of a real property deed not having an up to date deed.

One thing that happens at times, more so in rural areas is on the death of someone, their estate is not probated and their real property is inhabited by one or more heirs. The heir or heirs continue to pay real property taxes and even insurance when the property contains insurable structures. The problem is that as time goes on there may be a large number of heirs; people that have some legal claim to the property. Without a trail of title you end up with a lot of people that enjoy the property but cannot ever sell the property. This is referred to as “heir property”.

For this reason I am adamant about resolving the title during probate before time slips away and there are problems.

Another thing that I might see is someone buying a home for a child (whether with or without financial support) but the deed does not include the child sometimes at the insistence of the mortgage company. When the parent dies the child is in a home without their name on the deed. Having both names with right of survivorship allows a transition under operation of law, without having to probate the estate for that reason alone. With that in mind the child can continue to enjoy the home without worry of having no legal right to ever sell the home or other issues including being the insured under an insurance policy.

While it may be a better choice to pass real property through a Will or a Trust, it may be the wording of a deed that makes that transition easier. A Life Estate Deed allows real property to be someone else’s at your death. While the person or persons with the remainder interest have some legal rights during their life such as the fact that you cannot sell the property unless those with the remainder interest agree on the sale, for the most part your property is unhindered during life and the property may be excludable should you have the deed for at least five years and find that you have to apply for Medicaid should you find nursing home care necessary. Even a deed with a loved one or loved ones and a right of survivorship can provide for a smooth title transfer of real property.

Each adult with assets, even with just a little bit of money in a bank should talk to their lawyer about how their assets can pass after death. Sometimes a Will or Trust may not be necessary and a Payable on Death (POD) for a bank account may do the trick. But anyone that has assets needs to have a safe and clear means to pass those assets to a loved one without creating a bigger issue. Any bank account over about five thousand dollars without any transactional provision would have to be probated; up to twenty-five thousand dollars can pass under a small estate process which is a slightly easier process. There is a process within banking law that may allow a relatively easy transition of less than five thousand dollars to heirs when certain standards are met.

I hope that this has helped with your question. If you need a lawyer you can contact the Alabama State Bar Lawyer Referral service or ask a trusted friend about a lawyer that they might recommend.

This article is informative only and not meant to be all inclusive. Additionally this article does not serve as legal advice to the reader and does not constitute an attorney - client relationship. The reader should seek counsel from their attorney should any questions exist.

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Mailing address:

Ronald A. Holtsford, Esq.

Ronald A. Holtsford, LLC

7956 Vaughn Road, Box #124

Montgomery, AL 36116

(334) 220-3700

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