Ah, the New Year—a time for fresh starts, ambitious goals, and those inevitable gym memberships we’ll forget by February. While you’re jotting down resolutions to eat more kale and finally learn how to salsa dance, there’s one vital area you might be overlooking: your real estate and estate plan. Here’s the thing: your property isn’t just where you live or invest—it’s also a key piece of your legacy. Proactively addressing your estate plan is especially crucial when it comes to real estate. Here’s why:
- Ensuring Proper Ownership and Transfer
The way real estate is owned and titled can have a significant impact on how it’s passed on to your loved ones. For instance, if your property is titled solely in your name and you become incapacitated, your loved ones may have to go through lengthy and costly legal processes to have the courts appoint someone to make decisions on your behalf. By contrast, property held in a trust can easily be managed or transferred by a trustee in the event you are no longer able to manage the property yourself. By revising your estate plan, you can ensure that the property’s ownership structure aligns with your goals. Options like changing the tenancy structure or placing the property in a trust can facilitate smoother transfers and potentially avoid costly legal fees in the future.
- Accounting for Changes in Property Value
Real estate values can fluctuate significantly over time. If you purchased your home or an investment property decades ago, its current value may be substantially higher. An outdated estate plan may not reflect these changes, potentially leading to unintended tax consequences for your loved ones. Revisiting your estate plan allows you to adjust for current market values and consider strategies like gifting or creating trusts to minimize tax burdens.
- Adapting to Family and Health Changes
Life changes—such as marriages, divorces, births, or deaths in the family—can significantly impact your estate planning decisions. These events might prompt you to reassess who should inherit your real estate or how it should be managed. For example, if a child is now financially independent, you may decide to allocate a property to another heir who needs more support. Alternatively, you might designate a trusted individual as a durable power of attorney or transfer properties into a trust for easier management of your real estate, in case you become incapacitated.
Have we piqued your interest? Stay tuned for Part 2 of this blog, available on January 21, where we review three more reasons why updating your estate plan should be part of your resolutions in 2025! Eager to move forward with achieving this resolution? Call our office to schedule a consultation with one of our estate planning attorneys!