Top estate planning question: How do I handle real estate?

Real estate can serve as more than just a family property. It can serve as a valuable legal tool to diversify our investments, including vacation properties, rental homes, and commercial units. Because of the high value involved, it is wise to take care when planning to transfer these assets.

Three important steps to take when planning for the future of real estate holdings include the following.

#1: When do you want to transfer the property?

There are two main choices: during life or at death. Those who wish to begin the transfer process during life must take steps to protect their interests. This is particularly true if you wish to continue living in the property until death. You must use specific tools to achieve this goal or risk losing the property.

A transfer during death ensures that you retain the property during your lifetime but can mean a legal headache for your heirs. There are steps to reduce this risk, as discussed below.

#2: How do you want to transfer the property?

If transferring to just one heir, the transition is relatively easy. If more than one, you may want to consider bringing in financial professionals to help better ensure the split meets your intentions, whether that be an equal split or a different arrangement that works best for your family.

#3: Did you account for taxes?

This is important even for transfers to a single heir. Legal tools like a trust can reduce tax obligations and lower the financial burden on the estate. This better ensures all the work you put into building your estate is not lost.

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