Many Massachusetts homes have been in families for generations. Although one might think it would be as simple as handing over the front door key to a son or daughter, passing down a valuable asset like a home is much more complex.
Because family homes are often extremely valuable -- both sentimentally and financially -- it’s important to make sure all of the necessary steps are taken so that the asset can be handed down properly.
According to a recent article from Forbes, here are a few important steps to take:
Work with an experienced estate planning lawyer. An investment professional told Forbes that it is crucial to work with a lawyer who has experience with estate plans in order to make sure that the transaction is handled properly. “Don’t attempt this with a regular attorney,” the investment professional said.
Communicate openly with children and grandchildren. Because family homes are often a great source of emotions and attachment for the children or grandchildren that grew up there, it’s important to address the issue delicately and openly. Communication is key when it comes to real estate inheritance.
Take tax consequences into consideration. Passing down real estate can have vastly different tax outcomes depending on the estate planning tools that are used. For some families it will be best to place the property in a trust, while others might benefit more from passing the real estate to heirs through the estate.
Plan ahead for future maintenance costs. As we all know, the costs required to keep an expensive house up and running can be extremely expensive. That’s why it may be necessary to set up a maintence fund to ensure that the property stays well-maintained. Stocks and bonds are often used for this purpose.
In addition to these steps, there are several other legal and financial issues that must be addressed before passing down a family home to an heir, which it why it’s never too early to begin discussing an estate plan with an experienced attorney.
Source: Forbes, “Passing Down Your Home? 3 Steps To Creating A Successful Estate Plan,” Ritika Puri, Raymond James Contributor, June 30, 2014