Many families across Los Angeles own at least one property: a home. However, there are many residents who also own cabins, vacation homes or rental properties in addition to their primary residence. No matter how many pieces of real estate that a person or family owns, it can be crucial that they are addressed in an estate plan.
It can be easy to assume that passing on property is as simple as making a formal designation in a will. However, people who are of this line of thinking often fail to understand the legal and financial complications that can arise for the people who will receive property when the owner passes away.
One of the primary concerns to consider when it comes to real estate is the taxes. Whether a person leaves a home to a spouse, children or charitable organization, the risk of that party having to pay enormous taxes is one that should generally be avoided. There are many options that people can explore when it comes to minimizing tax responsibilities, including transferring property as a gift or setting up a trust.
Another serious issue can arise when there are emotional ties to piece of property. A family home or vacation property can be much more valuable than what is it is worth on the market. People can feel very connected to a place, which makes it crucial that people openly discuss their options for the property with those who will be affected by what happens to it.
Finally, it is important to remember that people can take over a home or other property, but it might require them to take on significant financial responsibilities including maintenance and repairs. In order to ease this burden, it can be helpful to also set aside money for these costs through investments and budget planning.
Properties and homes are often contentious issues in an estate plan. However, with open communication and thorough planning, people can make the process of transferring property much easier on themselves and their loved ones. Seeking the guidance and support of professionals with legal and financial experience can help people understand their options and make the appropriate decisions.
Source: Forbes, “Passing Down Your Home? 3 Steps To Creating A Successful Estate Plan,” Ritika Puri, June 30, 2014