Many people spend a lifetime investing in their homes, making real estate their most valuable asset. You want to use that value for something meaningful when you die, but you are not sure of the best way to achieve that goal.
There are numerous possible approaches to major assets when planning your estate, and no one solution is the best answer for every situation. The best way to utilize your home in your estate plan will depend on the relationships you have, your personal values and numerous other factors.
What are the three most common solutions for real estate in an estate plan?
Arrange for it to pass to a spouse or child directly
It is common for people to want their home to transfer to a specific individual. Provided that the other party already lives with you, you can potentially add them to the title by making them a joint tenant with rights of survivorship. That way, they inherit the property in full when you die without it passing through probate. You could also execute a quit claim deed that they can then record after your death.
Transfer ownership to a trust
Whether your goal is to bypass probate proceedings, property the house from creditor claims, avoid a challenge against your estate or minimize estate tax risk, a trust could help. The choice to move the property into a trust allows you to then structure the trust to pass tendency rights or control over the property to your loved one after you die. You can allow someone to live in the property and definitely without having the right to mortgage or sell it.
Arrange for the sale of the property
If there is no one specific family member that you know should inherit your house, you might leave instructions for the sale of the property after your death. However, you can include a clause extending the right of first refusal to your beneficiaries or interested parties. Such a clause would allow them to make an offer on the property before it goes on the market, which could keep the property in your family and be a secondary part of your legacy.
Your relationships with your loved ones, their assets and the other property in your estate will all influence the best solution for your specific situation. Thinking about your most valuable property as you plan your estate will help you maximize the impact of what you leave behind when you die.