What happens to your house if you die?

This question comes up a lot in my practice, both in terms of real estate and estate planning. For most people, their home is their largest investment. Moreover, people are often emotionally attached to their home. They want to make sure that their home is protected as much as possible, and they want to be certain that it passes to their spouse, children or other family members.

The simplest way to control who gets your home or the proceeds from its sale upon your death is to prepare an estate plan. Your attorney will explain which estate planning options are best for you based on your individual needs. You can control the distribution of your home within a properly drafted will, trust, or land trust. In most situations, you will not need to re-draft your will or trust if you sell your home and purchase a new one.

Additionally, as part of an effective estate plan to protect your home, you may consider buying a life insurance policy that will be sufficient to pay off the outstanding debt on your home in the event of your death. If you are leaving your home to family members who reside there and who depend on you to pay the mortgage , they could be left out in the cold if they cannot afford the montly payments. Funds from your life insurance could keep your loved ones in their home.

If you don’t have an estate plan, then the laws of intestacy apply to your home and to your estate in general. What happens to your home depends on your individual situation. For example, if you are married and own your home jointly with your spouse, your home passes automatically to your spouse upon your death. If your spouse pre-deceases you, your home and estate will be transferred to your heirs at law — either your children or your parents or your siblings or other family members — depending on your personal circumstances. If your spouse inherits the home and later dies without an estate plan, the home will be passed to his or her heirs; in other words, if you have no children, then your spouse’s relatives could inherit your home. If you have never been married and own a home solely in your name, then your heirs at law are your parents or your siblings and then your other relatives — again, this depends on your personal circumstances. If you have no heirs at law, a local municipality may step in and take possession of your home. For example, in Cook County, the Cook County Public Administrator’s Office takes over such homes and eventually auctions them off. It never fails to surprise me that so many homes are lost in this way every year, when all the owner had to do to protect the home and his heirs was prepare a will or other estate planning document.

Every homeowner should know how their property is deeded, and what will happen upon their death. Dig through those old papers and find the deed from when you purchased your home. If you ever prepared an estate plan, look through it and make sure your home, your prized possession, is being dealt with in the proper manner. If you do not have an estate plan, now is the time to prepare one. Not only can a thorough estate plan protect your family’s place of residence, but it can protect your family too.