Memories of growing up in a home are part of many American childhoods. However, the family home usually disappears after the children grow up and parents move on to the next phase of their lives. To keep a home in the family takes a fair amount of planning. If that’s something you want to do, advises the day in a recent article, “Planning to leave your home to your heirs,” you’ll need to sit down with an estate planning attorney, as soon as that decision has been made.
Another reason to expedite your estate plan: unexpected and tragic things happen. Without an estate plan, you may not have the guardian for your children who you would want. There may not be sufficient funds for your children’s education. The cost of settling an estate without a will takes a long time, and incurs costs that would not be an issue with an estate plan.
Real estate is frequently given to an adult child, grandchild, or is divided among several heirs. Once you know who will receive the property, discuss your plans with these people to keep them apprised of your plans and avoid any unpleasant surprises.
If you include your home in the will, you can stipulate precisely who should benefit from it. You can also say if you want the home to stay in the family or be sold.
Dividing the interest in a property evenly among beneficiaries might seem fair, but it can also create some unexpected complications. If one beneficiary wants to move into the home and another wants to sell it and split the proceeds, things could get dicey. Discuss this issue with your beneficiaries to resolve this potential conflict in advance. One beneficiary could buy out the other beneficiaries' shares in the property to take sole possession of it. However, you may need a life insurance policy to be sure that a sufficient amount of cash is available in your estate for a buyout.
A will is also used to delegate responsibilities to certain heirs. You select an executor to oversee the disposition of your estate after your death.
An outstanding mortgage balance can cause some trouble, when leaving a property to your family. Any debts you have at the time of your death, need to be paid before your estate can be settled. If you were still making mortgage payments, be sure your beneficiaries have a plan to that will enable them to continue making those mortgage payments to avoid a default. Beneficiaries, a surviving spouse, the executor of estate, or any other party can continue to make payments to your bank to avoid a foreclosure process. There are several ways that your beneficiaries can resolve a mortgage, after they take possession of the home. In addition to just selling the property, they can refinance the loan or pay off the mortgage with any assets they have or receive from your estate. That way, they would own the home free and clear.
Review your will regularly to keep it up to date. Make a change if a beneficiary dies, if your own circumstances change, or if your relationship with an heir changes to the point where you wish to not provide for them any longer.
You can also transfer your home to a living trust. A living trust lets you use and benefit from the asset while living and then transfer it to beneficiaries upon your death. A properly funded trust can avoid the probate process and save heirs time and money. The trust document identifies beneficiaries and determines how the estate will be distributed after death. It can also name a trustee to oversee this process and avoid conflict among beneficiaries.
Some people that that owning taking title to your home as "community property with right of survivorship" or as “joint tenants with right of survivorship,” will always avoid probate. This is true for the first spouse's death, but not the second spouse's death. Having your home properly coordinate with your trust or estate plan will ensure that your home passes to your intended beneficiaries a hassle free process.
Talk with your estate planning attorney about your situation and the best way to make this happen. This is a good example of when a family meeting can bring a clear understanding of what the future holds to avoid any misunderstandings. Talk to the Soto Law Firm today to determine what the best estate plan will be for you and your family.
Reference: the day (February 15, 2019) “Planning to leave your home to your heirs”