By Merri Rudd, appeared August 24, 2006, Albuquerque Journal, Business Outlook
Reprinted with permission

Editor's note: This column may not be quoted or reproduced in whole or part without express written permission of the author.

Q: I am 57 years old and own my home free and clear. I have a will that indicates that all my assets should be distributed equally between my twin sons who are now in their late twenties, married, and living in other parts of the country. Will my home automatically become their property or is there something else I need to do to ensure they will receive what I have willed them? F.A.

First, congratulations on owning your home free and clear. You should be very proud to live "rent free" at such a young age.

Second, you are wise to put your wishes in writing about who should inherit your home after your death.

To answer your question, I will assume that you are not currently married. Technically, the title to your home will "vest" in your twin sons upon your death. However, whether your sons receive title to the home immediately depends on how the title to your home is currently set up.

I have previously described New Mexico's law that allows an owner of real property, such as a home, to create a "transfer on death deed" (TODD) naming a beneficiary or beneficiaries to receive the real property after the owner dies. The owner must sign the TODD in the presence of a notary public, who notarizes the owner's signature on the TODD.

If you create and properly record a TODD prior to your death, ownership of your home should pass to your TODD beneficiaries immediately upon your death. Your sons would record your death certificate with the county clerk to complete the transfer of title, and no court probate proceeding would be necessary for your home. Your other assets might require a probate, depending on how they are titled.

TODDs must be recorded during the property owner's lifetime with the county clerk in the county where the real property is located. If a TODD is not properly recorded before the owner dies, the TODD is ineffective.

Although I do not recommend adding children onto a home deed as joint tenants, some people insist on doing so. Once someone is on a deed as a joint tenant, both joint tenants share ownership rights to the property, as well as liability for each other's debts. Serious problems with this method arise if one joint tenant wants to sell the home and the other joint tenant refuses to sign a deed to a new owner. Or, worse, one joint tenant could get a judgment or IRS lien against him or her or get into other financial difficulty. If the debtor is a joint tenant on the deed, the home can be attached to pay the debts.

While joint tenancies avoid probate, people should also recognize the drawbacks of this type of ownership. TODDs are a much safer way to avoid probate than joint tenancies. Having property properly titled in the name of the trustee of a trust also avoids probate.

If the title to your home is in your sole name and you have not created a TODD, a court probate proceeding to transfer title to the home will be necessary upon your death. Then the "personal representative's deed" discussed in my last column would transfer title to your home to your sons.

© 2006, Merri Rudd & Albuquerque Journal, All Rights Reserved