Furniture is the source of so many memories, and can be quite valuable in its own right. So, when drawing up an estate plan, it’s important to pay particular attention to how your furniture is divided up well, avoiding the costly and long-drawn out probate process.
Does Furniture Enter Probate?
Probate occurs when a will is contested and has to go through a court of law to ensure that it really is the last will and testament of the deceased. An estate also goes into probate when there is no legal will at the time of death.
Typically, household items like furniture enter probate, because they are part of probate assets with no individual or explicit title. Most furniture does not have much economic value but it often has sentimental value. Normally, the executor of your estate will distribute assets according to proportions outlined in your will. If however you want to leave a specific item to someone, then you have to leave explicit instructions in a revocable living trust, which will avoid probate altogether.
How Do You Avoid Probate?
Avoiding probate demands the existence of a good estate plan. This can be done by setting up, as we have said, a living trust. You could also designate a property as jointly owned or part of a joint tenancy, so that they inherit it the moment you pass away. Another way is to sign a transfer-on-death deed/registration which will transfer ownership once you die. Finally, you can give away the furniture you want to distribute. For instance, if you see leather couches for sale and buy them for your home and decide that you want someone to have them, you can just gift it to that person. Gifts are tax-deductible to a limit depending on your tax bracket.
What about Jointly Owned Furniture?
Jointly owned assets confer rights of survivorship. These are assets owned with someone else. So if you own furniture with someone else, in other words, both your names appear on the title or purchasing of that item was done by both of you without either cededing ownership rights, or a similar situation, then that furniture item is a jointly owned asset. That means that when you die, they will inherit your share and own the piece of furniture fully. This will happen the moment you die. It doesn’t matter if you name an heir in your will. You have to name a new owner while you are still alive.
Joint tenancy is another form of jointly owned asset. This is a legal arrangement in which two or more people who own real property together have defined ownership rights and interests. In this arrangement, it is possible to name an heir in your will. However, joint tenancy does not protect your assets from probate.
If an unmarried couple lives together, and the wealthier party dies, the surviving party can claim that they were married under common-law. Common-law marriages have three features: the couple lives together; they think of themselves as being married; and they present themselves as a married couple before the public. In order to prevent this, both parties should sign a non-marital habitation agreement, which states that although the couple lives together, it is not a married couple and their properties are not jointly owned.