Your home is probably your most valuable asset. As such, it becomes a crucial aspect of your estate planning that you must give much attention. If you own real estate, then you have to be even keener and more diligent when you plan your estate.
When planning your estate, your home and properties are among the most complicated parts of the process. Understandably, you really have to consider how you will leave your home and to whom you leave it to. Also, your home could be your most valuable asset and will be of great benefit to your loved ones when you pass away.
With that said, most people know that estate planning is not the easiest of things. However, if you care for your loved ones, it’s something you must do even though it’s taxing. Fortunately, some professionals can take you through the entire process
In this piece, we’ll show you the proper way to handle your home or any property you own when estate planning. First, however, we’ll highlight a few reasons why it’s so important to plan your estate.
The Important of Plan Your Estate
Today, it makes no sense to not have a plan for your estate. Most people have an ill-conceived notion that estate planning is only for the wealthy. This is far from the truth. If you have reasonable wealth and loved ones you care for, then estate planning should be mandatory.
Here are some reasons why estate planning is so important.
For Your Family’s Protection
Family is all that matters. You’ve most likely taken good care of them until now, so you should do the same when you pass away. Estate planning guarantees your family’s protection in the event of your death.
Avoid Family Feuds
There are plenty of instances where families fight over assets. It’s difficult for family members to reach an amicable decision on how to handle your wealth when you’re gone. Estate planning ensures there will be no legal battles or physical ones for that matter after your death.
To Avoid the State Doing It For You
In civil law, there’s something known as intestacy law. This is a will that the state prepares for you before you write your own. This will most likely won't reflect your wishes and could leave your family in a big mess when you die.
Choosing Your Heir
Estate planning allows you to choose your heirs. You can rest easy knowing you leave your estate in good hands. If not, you leave this crucial decision to the courts, which may not be what you want.
Avoid the Probate Process
Probate happens when you don't explicitly declare your heirs. The probate process is long, very expensive, and complicated. If you also have privacy issues be cautious because probate is also made public.
The Proper Way to Handle Your Property or Home When Planning Your Estate
Estate planning is a taxing and lengthy process, depending on who handles it. Planning for your home is usually time-consuming since it’s a crucial asset. If you’re a bit confused about the process. Here’s the correct way to handle property when planning your estate.
Co-ownership on the deed is one way to pass down your property easily to your beneficiaries. Listing your kids or whomever as co-owners or joint-tenants instantly transfers ownership to them after your demise.
This is one way to avoid some intestacy/ probate issues in the event you don’t write your will. However, this move may have a few cons. First, when you pass away, 50% of the home’s value is considered a taxable gift.
Also, if your beneficiary has financial issues or divorces in the future, your house may be put under lien. This means the court can possess the home until the beneficiary meets their debt obligations.
Writing a will passes your estate to your heirs when you die. It is the most common way of estate planning and ensuring everything you own passes down to your heirs.
If you write a will, you don’t avoid probate. When transferring your property to your heirs, the assets still pass through the probate process.
The cons of a will are that it is time-consuming and expensive. Also, your will must be made public, meaning anyone can see your assets and their heir. People with privacy concerns should avoid this option.
You can settle for a trust when your beneficiaries haven’t come of age. A trust is a legal way to give control of your assets to a grantor who manages your assets. When your heirs come of age, they can take control of their inheritance.
This eliminates the probate process since the trustee can distribute the assets when the time is right. However, setting up a trust is quite a complicated affair. It is wise to seek the services of an estate lawyer to help you through the entire process.
Selling Your Property
You might want to consider this mostly as a last resort. If you feel your children may not want the home, then selling it might be the best option. If selling isn’t a viable option, you can always rent your home.
This is when you’ve exhausted all possible asset planning options. You can then distribute the money to your children to have something to sustain them when you’re gone.
It’s way better if you’re a married couple and the home meets residency requirements. You may have tax deductibles, but only if you’ve lived two of the previous five years in the home. $500,000 of the home’s selling price won’t be taxed, but any above this is taxable.
Plan Your Estate Wisely With These Tips
Hopefully, you’re now well-acquainted with how to deal with property when planning your estate. Remember, estate planning isn’t for your sake; you plan your estate for the sake of your loved ones.
With so many estate planning options, you can always find a way that puts you at ease. If none of the ways fits your fancy, then consider selling or renting the house.
For more insightful reads, be sure to check out our other articles!