When you look at the average American, the bulk of our wealth is comprised of three components.
- The first is our retirement plans, whether they be 401(k)'s, IRA's or something similar.
- The second is our life insurance. Similar to retirement plans, life insurance, and retirement plans are both distributed pursuant to beneficiary forms upon our death.
- The third major category of wealth is real estate and with that, there is no beneficiary.
No one ever asks you at your real estate closing who should receive your house when you die. It would be really simple for the title company to have a beneficiary form for you to sign when you close but that would put a lot of attorneys out of business.
Instead, the best way to add a beneficiary to your house is to put it into a revocable living trust. The benefit is it will keep it out of probate if you die and it will protect it again guardianship if you ever become incapacitated.