For those of you who already have living trusts, congratulations. You are certainly on the right track when it comes to estate planning for real estate investors. The living trust is a tool we recommend to our clients, all of whom are investors just like you, all the time. Even if you don’t have one yet, this article is worth a read, and we suggest learning more about the living trust and estate planning at your earliest convenience.
What is a Living Trust For?
As a real estate investor, you may have many properties that you will pass on to your heirs. The living trust can help you ensure a seamless transition upon your passing. A living trust is an estate planning tool. It may be helpful to think of the revocable living trust as a large lockbox that holds your assets. The trust’s “job” is to hold title for the properties. Estate planning attorneys use living trusts as a way to avoid probate court.
When a living trust is created, a trustee will be named to control the assets for you. You can think of your trustee as the person who has the key to your “lockbox.” Your role is simply to be the beneficiary of your trust. You may direct your trustee to buy, sell, or transfer assets into or out of the trust.
How a Living Trust Compares With a Will
The will may be the most widely recognized estate planning tool, but a living trust is far superior to a will alone. Wills would have to go through probate court, which means your grieving loved ones would be navigating a maze of red tape before receiving anything from the estate.
he added benefit of keeping the value of the home out of the taxable portion of your estate.
Living trusts are easier to modify than wills, but harder to challenge legally. Trusts are also private, meaning using a living trust would remove your name from the public record. You would no longer own the property but retain control as the beneficiary of the trust.
The Ideal Solution: Living Trust and Pour-Over Will
For real estate investors who may be buying and selling assets frequently, it is important to know that you would normally update your estate plan each time you make a significant purchase or sale. This could present a challenge for an active investor with many properties, but that problem can be easily addressed by simply using a pour-over will. The pour-over will passes all property you own into your living trust upon your death.
For the real estate investor, a pour-will pairs well with the living trust to ensure a smooth, private transition of your assets. Using these tools together is a smart move.
Estate Planning is Part of Your Asset Protection Plan
If you think about it, estate planning is a critical part of your asset protection plan. When you plan your estate, you’re empowering yourself to take control of your legacy. Fortunately, the estate planning experts at Royal Legal Solutions can help you manage your assets and their future, as we offer both asset protection and estate planning services. Because we work so closely with real estate investors, and are investors ourselves, we are familiar with the particular concerns a real estate investor may have regarding this sensitive subject. If you haven’t made your estate plan yet, schedule your personalized consultation now.