An important part of estate planning is figuring out what to do with your real property. “Real property”—also known as “real estate”—is land and anything permanently attached to the land, like houses, buildings, fences, or trees. In contrast, "personal property" is everything else—from the money in your bank account to your furniture.
If you own real estate, it is likely to make up a large part of your assets. Having a plan for what will happen to your real estate when you die can save your loved ones a great deal of money and frustration.
Wills Put Real Property Into Probate
Using a will is a simple and effective way to transfer real property to a new owner when you die. To transfer real estate in a will, you simply include a brief description of the property in your will document and state who should get it when you die.
While you can transfer real property through a will, the downside is that everything that passes through your will goes through probate. Probate can be time-consuming, expensive, and often unnecessary. And because real estate is often a person’s most significant asset, it can be one of the most costly aspects of the probate process. Also, probate usually lasts for many months, and sometimes years. During that time, the new owners can’t transfer, refinance, or sell the property.
Avoiding Probate Saves Your Loved Ones Time and Money
You can avoid these problems by keeping your real property out of probate. But you have to plan ahead. You have a few options, including transferring your property through a living trust, transfer-on-death deed, or co-ownership.
Living Trusts
Living trusts are a popular and effective way to transfer real property outside of probate. First, you make a living trust document that says who should get the property, and who should be the “trustee” who manages the trust property (typically you, until you die). Then you place the real property into your living trust by changing its title document to show that the trust is the new owner. So, for example, you might change the owner on your deed from "Teena Lawrence" to "Teena Lawrence, trustee of the Teena Lawrence Living Trust dated December 10, 2021."
If you're the trustee, while you're still alive, you control the trust property, and you can transfer it out of the trust at any time. When you die, the person you've named as successor trustee will transfer the property to your named beneficiary quickly, at little cost, and without probate.
Living trusts are a little more complicated and expensive to set up than a will, but the additional costs are usually worth the money and headaches saved by keeping the property out of probate.
Transfer-on-Death or Beneficiary Deeds
In an increasing number of states, you can keep your real property out of probate by using a transfer-on-death deed, sometimes called a “beneficiary deed.” To make a transfer-on-death deed, you create a deed that identifies your real estate and names the beneficiaries who should get the property when you die. This type of deed does not affect ownership of the property during your lifetime, and you can change or revoke the deed at any time. You're still free to sell the real estate if you wish. After your death, the beneficiaries listed on your transfer-on-death deed will receive the property quickly, at very little cost, and without probate.
Co-Ownership
You can also pass your real property without probate by jointly owning your property with the person whom you want to own the property after you die. You must include survivorship language on the property’s ownership deed. When you die, the property will pass directly to the other owner. However, with this method, your beneficiary has an ownership interest in the property while you're still alive—you become co-owners. This can raise issues over control over the property, expose the property to the creditors of your co-owner, and raise significant tax concerns.
Real Property, Probate, and Estate Taxes
To clear up a common misunderstanding, keeping property out of probate—using a living trust, transfer-on-death deed, co-ownership, or any other probate-avoidance device—does not affect your estate’s obligation to pay estate taxes. Your taxable estate will include any property that you own at your death, whether it goes through probate or not.
That said, most people do not need to worry about estate taxes. For death in 2026, federal estate taxes apply only to those estates worth more than $15 million ($30 million for married couples), and this amount rises each year with inflation. Needless to say, federal estate taxes affect only a very small fraction of estates.
However, if you live in a state that levies a state estate tax, you should look into your state’s exemption amount, because the estate exemptions are lower than the federal exemptions.
If you are one of the rare people who do need to worry about estate taxes, and you want to keep your real property out of your taxable estate, there are some ways to do this—like giving away your property during your lifetime, or transferring it to an irrevocable trust over which you have no control. See a lawyer to discuss your options.
An Estate Planning Lawyer Can Help
To learn more about how you can keep your property out of probate, about how to save on taxes, or to get help with planning your estate, talk to an estate planning lawyer near you.
Questions for Your Attorney:
- Can I use California’s transfer-on-death deed for property I own in Hawaii?
- What are the legal pros and cons of co-owning my house with my daughter as joint tenants?
- How much will it cost for my real estate to go through probate?