Legacy Planning for Real Estate
An important part of legacy planning is protecting your real estate investments. Many challenges can arise when it comes to leaving your real estate to your children or other beneficiaries. At Arnold & Smith, PLLC, we understand that estate planning based on the immediate future is not helpful in the long-run, especially when real estate is involved. When our clients would like to transfer parcels of real estate to one child or the other, we help them understand all of their options. Situations can change, and they almost certainly will.Best Practices for Transferring Property
Real estate assets may not be valued the same at your death as they are now. None of us can predict the future and see what will happen to your property. When it does make sense to leave your real estate assets to your children, you may benefit from leaving instructions to your executor or trustees to divide the assets up based on the value of the real estate at the time of your death.
What happens when you do not want your real estate to be sold and divided up among your children? For example, perhaps you do not want to sell your family vacation home. The prices in the area may have risen since you purchased your home; Your adult children might not be able to afford a vacation home if they needed to buy one now in the area where your current vacation home is located; Or your family may have special memories from spending time at your mountain or beach vacation house.
You and your children may want to allow the house to increase in value over time so your loved ones can keep the home for generations. When your children agree and pay the property tax and maintain the home, keeping the home in the family makes sense. Unfortunately, as a family grows, it can become more spread out and more difficult for your family to maintain these properties for generations.
The responsibility of keeping up your home may fall on one of your children, who may be forced into paying for the upkeep of the property alone. When your family cannot manage the property well, it often makes sense to arrange for a trustee to sell the property and divide the profits among family members.Creating a Real Estate Trust
Creating a real estate trust is often the best option for family members, especially when you do not want to divide up your real estate. When you create a trust, you can design a trust agreement that defines who has the right to use the vacation home. You can also lay out what costs each of your children are responsible for and who will handle maintaining your property. You can even use your trust instrument to determine who gets to use the home during major holidays and who will pay bills and taxes. You will also be able to decide whether your children can lease the vacation home to third parties.
Transferring property into your trust will allow you to determine what will happen should your children decide to sell the real estate property down the road. You can state under which conditions your children or grandchildren can sell your property. You can decide that your family members have the right to purchase the property if a relative decides to sell it. Doing so will allow one of your family members to purchase the home at its fair market value before the trust puts the house up for sale to the general public. You can also dictate how the proceeds from your property’s sale will be distributed among your loved ones.Considering the Long-Term Consequences of Real Estate Planning
When engaging in estate planning, it is crucial to remember that circumstances of families change frequently. The lawyers at Arnold & Smith, PLLC understand that things change from one generation to the next. That is why our lawyers help our clients develop estate plans that look far into the future.
We help our clients consider all of the long-term implications of their real estate transfers and create an estate plan that protects their property from unintended consequences. In many cases, transferring the property into a trust is an excellent option to protect and control the property. We can help you create a trust agreement that meets your family’s unique needs. Contact us today to schedule your initial consultation at our Charlotte, Mooresville, or Monroe offices.