How to Legally Transfer Property Before Death
If you want to ensure your home or other assets pass smoothly to your loved ones without legal headaches, transferring property before death can be a smart move. It can help avoid probate, reduce estate taxes, and provide clarity for your heirs.
But how you transfer that property matters. The wrong choice can trigger unnecessary taxes or limit your control during your lifetime. In this guide, we’ll break down the most common legal methods for transferring property before death and the implications of each.
Why Plan for Property Transfer Now?
Waiting until after death to distribute property means your estate may go through probate, a court-supervised process that can take months (or years) and cost your beneficiaries time, money, and stress.
Planning ahead allows you to:
- Avoid probate delays
- Minimize family conflict
- Potentially reduce estate taxes
- Maintain control over how and when assets are passed on
Joint Tenancy With Right of Survivorship
One of the simplest ways to pass property to a loved one is by adding them as a joint owner with right of survivorship. When one owner dies, their share automatically transfers to the surviving owner no probate needed.
How it works:
- Common for spouses or close family members
- Title must clearly state “joint tenants with right of survivorship”
- Both owners have equal rights to use and manage the property
Pros:
- Immediate transfer of ownership upon death
- Avoids probate
- Easy and inexpensive to set up
Cons:
- You lose full control—your co-owner can force a sale or make decisions without you
- Your interest could be subject to their debts, lawsuits, or divorce
- May trigger gift tax if added co-owner isn’t your spouse
Example: Mary adds her daughter as a joint tenant on her house. When Mary passes, her daughter automatically owns the home—without court intervention.
Transfer-on-Death (TOD) Deeds
A Transfer-on-Death deed, also called a beneficiary deed, lets you name who should inherit your real estate when you die—while you keep full ownership while alive.
How it works:
- Only takes effect upon your death
- Can be revoked or changed at any time
- Available in over 30 states, including California, Texas, and Arizona
Pros:
- Avoids probate
- You retain full control during your lifetime
- Doesn’t trigger gift tax or affect Medicaid eligibility
Cons:
- Must be recorded properly with the county
- Not valid in all states
- Beneficiary receives the property “as-is”, with all liens or debts attached
Tip: If your state allows it, a TOD deed is often the easiest way to pass property without losing control.
Revocable Living Trusts
A revocable living trust is a legal entity you create to “hold” your property while you’re alive, and then distribute it after your death—without probate.
You (the grantor) can also be the trustee and beneficiary while alive, retaining complete control.
How it works:
- You transfer ownership of the property to the trust
- You manage the trust and can change or revoke it at any time
- After death, a successor trustee distributes the assets according to your instructions
Pros:
- Bypasses probate completely
- Offers flexibility—you can change terms at any time
- Keeps your affairs private (unlike a will)
- Can include contingencies for minor children or disabled dependents
Cons:
- Requires upfront setup with an attorney
- You must formally title the property into the trust
- More complex than other methods
Example: John creates a revocable trust naming his two sons as beneficiaries. When he dies, the property transfers smoothly to them without probate per the trust’s terms.
Irrevocable Trusts
An irrevocable trust is more rigid, but can offer stronger asset protection and tax benefits.
Key differences:
- Once created, it cannot be changed without the beneficiary’s consent
- Property placed in the trust is no longer legally yours
- May help qualify for Medicaid and reduce estate taxes
Best for:
- High-net-worth individuals
- Those needing asset protection from creditors or lawsuits
- Families with long-term care planning needs
Caution: Because you give up ownership, you also give up control. Talk to a financial advisor or estate planning attorney before choosing this route.
Gift Deeds
Some people choose to give away property during their lifetime through a gift deed.
Pros:
- Simple and quick
- No court process required
- Allows you to see the impact of your gift
Cons:
- May trigger gift tax if the value exceeds the IRS annual exemption ($18,000 in 2025 per recipient)
- You lose full ownership and control
- No stepped-up basis—could increase capital gains tax for recipient
Tip: This option is best for smaller properties or where tax implications are minimal.
Tax Implications to Consider
Transferring property before death isn’t just about avoiding probate you also need to consider tax impact:
- Stepped-up basis: If heirs inherit property after death, they get a “step up” in cost basis reducing capital gains tax when they sell. Lifetime gifts don’t receive this.
- Gift tax: Transfers above the annual exclusion may count against your lifetime gift and estate tax exemption (currently $13.61 million per person in 2025).
- Medicaid lookback period: Giving away property may impact eligibility for long-term care benefits if done within 5 years of applying.
Which Method Is Right for You?
Here’s a quick overview:
| Method | Probate Avoidance | Control Retained | Tax Efficient | Complexity |
|---|---|---|---|---|
| Joint Tenancy | Yes | Partial | Mixed | Low |
| Transfer-on-Death Deed | Yes | Full | Yes | Low |
| Revocable Trust | Yes | Full | Yes | Medium |
| Irrevocable Trust | Yes | No | High | High |
| Gift Deed | Yes | No | Low | Low |
Final Thoughts
Passing property to loved ones is a powerful way to create stability for the next generation but it has to be done right. Whether you want simplicity, privacy, or asset protection, there’s a strategy that fits.
Before making a move, talk with an estate planning attorney who understands your state laws and financial goals. One size doesn’t fit all and it’s your legacy at stake.
Up next: Pros and Cons of Putting Your Home in a Trust — Learn whether a trust is the right place for your most valuable asset.
