During estate planning, testators generally make arrangements for the protection of their dependent family members, such as spouses and children. They also establish beneficiary designations so that specific people inherit the resources from their estate after their passing.
Frequently, resources with higher values require the most careful consideration while developing an estate plan. For many testators, the highest-value resource in their own name may be the home where they live or other real estate holdings. People generally want to ensure that the property they own passes to the person they intend with minimal conflict or intervention by outside parties.
What are the estate planning tools or strategies that property owners can use to ensure the appropriate descent of real property holdings?
Executing a new deed
Frequently, people want to allow individuals who already cohabitate with them to inherit the property where they live together. The beneficiary can then continue residing there even after the current owner dies. If an individual shares a home with one of their children, a close friend or an unmarried romantic partner, they may want to sign a deed to change how they hold title for the property. Someone who has an interest in the property as a joint tenant with rights of survivorship can automatically assume ownership when the other owner passes. Adding the intended beneficiary to the title ahead of time can keep the home out of probate court.
Establishing a trust
There are multiple benefits derived from establishing a trust as part of an estate plan. Owning property through a trust can help protect the property from collection efforts both during retirement and estate administration. A trust can also help allow for the transfer of ownership without the home becoming part of the testator’s estate. Trust instructions can allow someone to continue residing at home without taking control of it. The trustee can manage the property and allow access or can arrange for its sale in accordance with trust instructions.
Adding the home to a will
The simplest way to arrange for a specific person to inherit real property is to include real estate holdings in the assets allocated in a will. Individuals can leave real property for one person to inherit. They can also provide instructions for the sale of the home during estate administration. That way, the personal representative administering the estate can distribute the proceeds from the sale to the appropriate parties.
Factors including long-term intentions for a property and the overall value of an individual’s estate influence the best approach to real property while estate planning. Testators may need help evaluating their options to find the best solution given their resources and goals, and that’s okay.