Matt on How Two Words on a Deed Can Protect Your Spouse from Probate and Unexpected Taxes

Matt recounts Margaret's story, revealing how omitting two crucial words from a home deed—'joint tenants with the right of survivorship'—forced her into months of probate after her husband's death, despite years of meticulous payments and both names on paperwork. The default way most deeds are titled ('tenants in common') means each spouse owns a separate share, and after one dies, their half often goes to probate unless the deed specifically adds survivorship rights. The fix for this is free and simple, yet title companies, lenders, and closing agents frequently fail to highlight it. Matt urges viewers to check their deeds for exact language, as the difference affects not just probate but also potential tax bills when selling a home after a death.

He explains that in most states, joint tenancy only steps up the tax basis for the deceased spouse's half. If a home was bought for $150,000 and is now worth $750,000, the survivor's gain is still partly taxed unless they meet IRS exclusion rules (up to $500,000 if sold soon after death). Nine states (Nevada, California, Texas, Washington, Arizona, Wisconsin, Idaho, New Mexico, Louisiana) offer community property rules that step up the basis on both halves, erasing tax on the full gain. Matt emphasizes that the right paperwork prevents expensive surprises—the choice between tenants in common, joint tenancy, and community property is critical and depends on state law and marital status.

Matt advocates treating deeds as part of broader estate planning. Only a properly drafted and funded trust solves both probate and incapacity risks (e.g., if a spouse becomes unable to sign), offers privacy, and aligns ownership with tax strategies. He warns that deeds alone can't protect against incapacity: families can end up in court to manage a house if one spouse is alive but unable to sign, and trusts cover that scenario. Matt urges viewers to take immediate action: locate their deed, read how title is held, check for survivorship language, and consult a state attorney regarding community property status if in one of the nine states. For full coverage (probate, taxes, incapacity, privacy), establish a trust. He notes that there is no official deadline, which makes the issue easy to delay but devastating when overlooked. Matt concludes: spend 10 minutes tonight to check your deed and lock your family's legal security.