Unlike cars, which we covered in our last blog post in this series, houses are real estate and are subject to different restrictions in estate administration in in the state of Utah, while other states might allow things like transfer on death deeds or probate exemptions for real estate below a certain dollar amount. In Utah, the only real way around probate for a house is either to put it in a trust, business, or jointly own it with somebody with rights of survivorship. If avoiding probate isn’t a concern, then a simple will or even intestate succession (which states default rules for people who die without a will), that probate process will clarify the meaning of the will or interpret the agent or decide who the true heirs are of this person, and just leave the house to that person.

However, that process can take some time and can be costly. If you want to avoid probate, the house can either be jointly owned with rights of survivorship or be held in a business or trust. Now, I’m going to ignore holding it in the business for now, because many of the issues with owning a business are similar to those with the trust, with a few differences in taxation and minor nuances that we won’t get into in this blog post. It comes down to “Do I want to own this property jointly with rights of survivorship, or do I want to put in trust?” Either way, it avoids probate. It’s just a matter of which one is better if the house is owned jointly with rights of survivorship. The surviving joint heir receives that property with a simple filing through the county recorder with the death certificate stating that they are indeed a surviving joint heir or joint tenant.

The challenge with this is that you have to own the property jointly. Let’s say dad has passed away, mom is now a widow and wants to avoid probate. She puts the house jointly in her name and in her children’s names, thinking that this’ll avoid probate, which is fine because that is what it does. The downside is that, rather than being exposed to just mom’s creditors, the house is now up for grabs for any of those joint owner’s creditors as well, including divorces or maybe an accident that the children might get in and and have some kind of judgment. They become subject to the joint tenant with right of survivorship, also meaning joint liability. That makes that property subject to creditors and claims of all joint owners. If that is how the properties can be held, that could be a problem.

Likewise, we are sometimes dealing with different types of public benefits. Eligibility could affect public benefits of any of the joint tenants. It could also be something that causes an administrative headache because, even if we have three children who are all joint owners, what if one wants to sell the property or one wants to make improvements and the others are not on board with that decision? We don’t necessarily want to go to court to make those decisions for them, and we don’t want and leave it at that. With the trust on the other hand, if the children were listed as beneficiaries of the trust, it’s not subject to the claims of their creditors until they actually received the property, which is well after the death of the owner of the property. So estate planning for a house is much more flexible and much more secure through a trust than through a simple joint tenancy with right of survivorship.

Now that being said, most spouses or long-term committed partners are probably fine holding that property as joint tenants with right of survivorship. But if for people who have a parent-child relationship or are friends with the people who’s property they’re inheriting, that’s probably best handled through a trust and, in the long-term, almost certainly less expensive through trust than by any other means.

This article is adapted from Tyler Melling’s upcoming book: Estate Planning for Utah’s Middle Class.
Tyler Melling is an estate planning attorney licensed in Utah, an adjunct professor of estate planning and probate law at Southern Utah University, and the author of The Utah Uniform Probate Code: A Quick-Reference Guide for Practitioners and Students