How to Pass Your Maryland Rental Property to Your Heirs Without Probate

Many Maryland property owners wrongly assume that their rental property must go through probate when they pass away. The reality is that there are estate planning tools that allow the transfer of ownership outside of probate.

On approach is to create a company and retitle the property into the company. This can also provide some liability protection for you as the owner. If the property has a mortgage, you should first inquire as to whether the lender will approve a transfer of the property into the newly formed company. There are other considerations as well and it is best to speak with an attorney and a tax advisor before proceeding.

Another strategy is to place the rental property into a revocable living trust. As the trustee, you would continue to manage and control the property just as you had before the transfer. The difference is you as an individual are no longer the owner. Technically, the trust becomes the owner, and thus the property avoids passing through probate. Instead, the successor trustee you appoint in your trust agreement will continue managing the property according to instructions laid out in the trust. This framework is particularly useful when heirs need to continue collecting rent and maintaining the property.

If you are married, another strategy is to title the rental property as tenants by the entirety, in which case ownership automatically transfers to the surviving spouse upon death of the first spouse. While this is an effective way to transfer ownership after your death, it does not account for how the property will be distributed to beneficiaries after the surviving spouse passes away. For this, you may need a more comprehensive estate plan.

If you own rental property in Maryland and want to explore probate-avoidance strategies, consult an experienced probate attorney who can help you determine the best approach given your current circumstances.

For a free, confidential conversation to discuss Maryland probate, contact Maryland estate attorney Stephen J. Reichert at 410-299-4959 or sreichert@reichertlegal.com.

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