Estate planning with real estate in the portfolio. Many people try to figure out which of their heirs would have wanted any property they currently own. What happens more frequently is the estate is liquidated. Then the heirs to the estate try to work out the distribution. Those changes during estate disbursement can be costly to the estate for the distribution of assets. I have witnessed fighting just because one her did not want anything left t go to the other heirs.
Most things in real estate it takes advanced planning to consider some other options. We would suggest below there are examples of items that we might want to consider doing to make those things work better for your family. It is strongly recommended that any ideas connected in this site would be confirmed with your tax person handling your finances to see if it could work for you. No two situations the same for anyone but there are definitely similarities.
Let’s take for example that you own two rental homes either in Las Vegas or some other city where you’re from. Investigating how to deal with your property you realize that person no interest in owning or keeping your properties.
Many times when your looking at properties when you start to divide up the estate the numbers don’t come out exactly even. many times things left to The Heirs get hurt feelings just because one person wants to keep a property another person wants to sell a property and a third person may want to hold the property in the estate as a group. the last thing any of us want to do is cause feelings within the family or with others involved in the estate, strife starts at that point forward and it may be disastrous.
As a real estate Broker with well over 38 years of experience and dealt with many estates. I have worked with families who have things worked out. Love one another enough that no one wants to cause any feelings at all. In the end we were unaware of any issues families members had with anyone else within the estate. To say that’s the absolute Norm it is not I’ve heard and witnessed many other conversations and outcomes. Very often you’ll find parties in the estate will each retain their own attorneys and at the end of the day the attorney’s end up with most of the money. I really don’t believe that any of us want things to end up that way. Fore thought and some effort can avoid or remove most if not all of those problems from happening.
We are suggesting some other options that may be considered for your estate planning. Many times your loved one’s don’t live anywhere close to you or many times the property that you own are located in other states. The location is away from the person that you would eventually like to have some of your estate. If we take this to another level we will find out that there’s a good possibility they would be very interested in some real estate in given to them. Especially if it’s in an area where they would like to live or where they would like to own a rental Investment. Something that I’ve seen often is when a grandchild or a child goes to college rather than paying rent all those years a grandparent or even the parents will buy a property in the area where they are going to school rather than having them pay rent, live in dorm or school housing.
What if you have a rental that has a tenant that’s going to move out and at that point you look to dispose of that property in a real estate sale but you don’t want to pay taxes on all that money. 1031 exchange would allow you to buy a property another investment property so discuss a few options with the party, your child or your grandchild or whomever else you would like to leave assets to. You can select real estate you pick out that would benefit the heir now, one that they would really like to own in the future it could be in any state anywhere someone has an interest to own that property. then you dispose of the property that you own now place it in the 1031 exchange and then buy the property that they would be interested in or Adam or more value than the one you’re selling. If the one you are buying is less money than the one you were selling then you will have some boot which you have to pay taxes on but maybe you’ll have something to do fun with that.
In this scenario if you are still in the need of income or don’t want to give away that income soon that property can be leased and you can receive the bonus benefits of having it be your income now. You also need to keep in mind that any property purchased in a 1031 exchange will need to be treated as income stream for a period of time. When using the plan of the 1031 exchange the property needs to be remain an investment property.
Now take this one step further yes you do make out a will and Trust so that it will accomplish what you would like to accomplish in estate planning. The scenario we just outlined you can have what is called a deed upon death filled out and recorded on any given property. That deed would be recorded against the property now and should something happen to all parties that owns the property it is then deeded away now for when you die. The property is deeded away already in the name of the person you would like to have own it but you own it for your life estate. In this scenario the person will own the property and you know that there will be no arguments in the estate because you have split it up the way you want to in deeded form. For an example let’s say you have three children and under this scenario you purchased a home wherever those three children would like you to purchase one let’s say there’s a person in California and there’s a person in Colorado and there’s a person in Washington. if you diversify your portfolio and buy a property in those areas you can have the rental income during the time that the property is owned by you. Then when you have passed each one of those three siblings would own a property that they helped pick out and you can rest assured they love it and could move in themselves or dispose of it as they see fit when it is theirs. In Fact it is one they picked out All Heirs know that you picked it out with them and gave it to them and there are no arguments and no reason to call an attorney. it is possible that most of the estate can be handled in this manner but it certainly is a great option.