As you start aging and own real property, one thing you need to plan for is how to pass on that property after you pass away. A good plan for your home and other properties can help prevent your family from going through a lot of stress after you die.
Deciding how you want to have your home handled after your death is one of the most important parts of an estate plan. You’ll want to talk to your family about the plans you make, so there is no confusion about your intentions.
There are many different strategies for handling estate planning issues with real estate, from transferring the home or property upon your death to placing your property into a qualified personal residence trust.
You must plan for your most valuable assets
For most people, homes and other residential properties are their most valuable assets. These assets can also be the most complex parts of estate plans, because they are complicated to pass on to others.
To prepare to transfer your home, you need to think about the goals you have for it. Is it totally paid off? Are you going to give it to an heir who won’t want to sell it? Do you want to pass it to someone who may end up liquidating it? You should talk to your children or the heir who will receive the property and find out what they would like to do with it. Knowing that can help you plan appropriately during the estate planning process.
Is co-ownership a good idea to transfer a property?
Co-ownership may seem like a good way to pass on your home or property. After you alter the deed to the home and add someone as a co-owner, they will automatically be in place to take ownership of the home when you pass away. This helps you avoid probate.
However, one issue that may come up with this kind of transfer is that you may have to pay gift taxes on the portion of the value of the home that you transfer. Using this method also means that the other party has immediate control of the property, which means that any financial issues they have in the future could threaten the property. You would also need permission to sell the home or take out a new mortgage. This can also have tremendously negative consequences with respect to future capital gains taxes upon an eventual sale of the property.
There are many things to consider if you have property to pass on after your death. You should contact a competent attorney, who will be able to talk to you about all the various pros and cons associated with the transfer of real property upon death, and which options may work best for you.