Trust and estate planning for real estate is important to consider for individuals especially for those who own property and want to ensure the smooth transfer and management of those assets both during your lifetime and after passing. Estate planning involves creating a comprehensive plan for the distribution of assets, including real estate, and minimizing tax implications. Trusts are often used in estate planning as they provide various benefits, such as protecting your property and allowing for a direct transfer of assets to beneficiaries.
It is not just about trusts. There are many more aspects that need to be considered when planning ahead and protecting your assets! Here are some questions to help you consider:
- What about your health care decisions? Do you have an advance health care directive?
- Will your trust work properly when you're ill or disabled (coordination between your trust and ancillary estate planning documents)
- If you have minor children, have you designated a guardian?
- Do you have significant digital assets?
- How about business succession planning?
- Should gifting be done during life instead of death?
One common approach to estate planning for real estate is establishing a trust-based estate plan. A trust allows the real estate owner to place the property in the trust for safekeeping and provide legal protections for the trustee(s) and beneficiaries. Additionally, trusts can help bypass the probate process, which can be time-consuming and expensive, ensuring a smoother transfer of real estate assets.
It is important to start planning now in order to avoid future pitfalls. Putting together your trust and having difficult discussions now can mitigate future tension, confusion, or difficulties. It is important to have a roadmap and plan for the future and in order to inform and protect your loved ones.
Follow the guidelines below to ensure that your trustees are well aware of the plan:
- Properly advise the successor trustees of future plans
- Provide trustees with guidelines and information
- Be mindful of conflicts of interest (representing trustee in fiduciary capacity only-not as a beneficiary)
There are a few things that you can do to ensure a proper formation for your trust:
- Proper drafting - get the right attorney!
- Add "statement of intent" to the trust
- Include schedule of assets to the trust
- Draft general assignment Problem
- Prepare letters to financial institutions and insurance companies
In summary, trust and estate planning for real estate involves creating a comprehensive plan for the transfer and management of real estate assets, often utilizing trusts to protect the property and facilitate a smooth transfer to beneficiaries. Professional guidance is crucial to ensure the proper execution of the plan and minimize any potential tax implications.
A few key takeaways for your trust:
- Have the difficult conversations today to avoid future pitfalls
- Make sure your attorney, CPA, and financial planner are all on the same page - find the right "team"
- Flexibility is key
- Review your estate plan every 3-5 years or as significant life changes occur
It's essential to discuss your plans with your family and consult with professionals such as estate planning attorneys or financial advisors specializing in trust and estate planning. These professionals can provide guidance on selecting the right type of trust for your specific needs and assist in developing a comprehensive estate plan that aligns with your goals and preferences.
I have an extensive network of professionals who can assist you, such as Lagerlof. Please reach out for more information and to get connected! Reach out to Josh Driskell and Daniel Sullivan from Lagerlof with any further questions or concerns.
Megan Spargo-Ferrell
626.390.3831
DRE #01705291