What Happens if a Home Does Not Get Placed Into a Revocable Living Trust?
One of the reasons why people choose to create a Revocable Living Trust versus a Last Will and Testament is because (if done properly) a Revocable Living Trust will avoid probate. The way a Revocable Living Trust avoids probate is by transferring certain assets into the Trust and retitling the owner as the name of the Revocable Living Trust. I have to warn you that you must consult with an attorney prior to transferring any assets into a Revocable Living Trust. There are negative tax consequences to transferring certain assets. Essentially, if there are no assets in the person’s name then there are no assets that will pass through probate.
If a husband and wife own a house together in North Carolina, they are said to own it as tenants by the entireties. This means, that at the death of the first spouse (we will say for example purposes that it is the husband that dies first) she owns the home automatically. The wife is said to have rights of survivorship. If the wife continues to leave the home in her name alone, at her death, the house will have to be probated and will pass by way of a Last Will and Testament, (if she has no Last Will and Testament it will pass by intestacy laws and North Carolina gets to decide who receives that property.)
If, on the other other hand, the home was placed into a Revocable Living Trust, we look to the Trust to tell us who receives the home when the wife passes away. There is no need to have a probate because the home was not owned by an individual but owned by the Revocable Living Trust.