Photo Source: Josh Gosfield
Where there's a will, there's a way indeed. Punny puns intended. Seriously, folks. Leaving your heirs better off than you were is the point of your life. Finish strong. Ensure a strong future generation. This is not the time to be selfish!
You can't be afraid to deal with emotions and difficult topics in life. You are a business. Estate planning is thriving. Think of what you're preventing: adult children squabbles, smaller pots of cash for heirs to divide, and more.
Back to wills. That is the standard way to pass down your home. You can also create a variety of trusts, which minimizes costs and delays of asset transfers.
If your family's potential heirs get along then all you might want is a simple will. The chosen person to execute the estate should live in the same state of the home, too. Otherwise, financial experts suggest a trust set up to address disagreements between multiple heirs, especially if they are of different monetary brackets.
Let's face it, shall we? Probates cost. A lot. Make your transition in life smooth for the highest good of all involved. Traveling for hearings, filing and paperwork signatures, court appearances, and the like, just to settle wills. Not to mention time off from work. Do you want to spend vacation days like that? Hiring a lawyer to execute is pricey, too. We're talking 5 to 15 percent of the estate's total value, according to Kevin Ruth, head of wealth planning and personal trust at Fidelity Investments.
Lower those costs and pay upfront with a trust. Bypass probate by naming your beneficiaries. Distributing this way also prevents the wrong people accessing your assets, like an ex son or daughter in law.
Judge not your trustees by age but by sound organizational and financial skills. Financial freedom requires comfort with responsibility.
More savings are to be had in tax and health care if you approach your estate planning while still alive. Property gifts help with Medicaid qualifications for long-term health and nursing. For a minimum of five years before passing away you must generally meet certain income limits.
Talk to your financial advisor about considering a Qualified Personal Residence Trust. You'll want to explore every avenue to reduce tax burdens and gift your loved ones at a fraction of your property's value. Long term means more benefits.
Using the Internal Revenue Service's formula, based on the grantor's age, trust's term, and I.R.S.'s interest rate, you can pass your house down at a deep discount on the house's actual market value. Negotiate early. You never know what life will throw at you the longer you wait.
Handing over an apartment is more complicated than a single family home. Board members prefer beneficiaries sell units, according to Joan Kagan, sales manager at real estate firm Triplemint.
Help your sensitive family avoid unnecessary stress. Find out whether they even want to live in your house or manage your rental property. Think while you still can. Thank you for reading!
Estate Planning: Leaving a Home to Heirs While You’re Still Alive [New York Times]