Planning can be fun and exciting if the things you are planning are fun and exciting. Most of us do not enjoy planning for becoming incompetent or dying. Even so, that type of planning is extremely important.
If you own property or owe debts, it is a good idea to have a plan to deal with potential incompetency or death. An estate plan may include powers of attorney, a Last Will and Testament and real estate Deeds. A power of attorney provides guidance in the event you are living, but need assistance with health care or financial issues. A Last Will and Testament provides guidance to your Executor who distributes your property as you have directed.
Your estate plan may provide for deeding real estate. If your estate is large enough to be subject to Federal income tax, transferring real estate before you die can reduce the estate tax burden. If you need to use the property during your lifetime, you can deed the property to someone while still retaining a life estate. As life tenant, you would continue to have exclusive possession and use of the property until you die and would be responsible for upkeep, insurance and taxes. If you deed property to someone while retaining a life estate, at your death the property automatically transfers to that person and does not go through your estate.
Parents may use deeds to transfer partial interests in family land to their children so that they establish ownership prior to the parents’ death. Parents can also use life estate deeds where both parents have a life estate. The property passes to the children automatically upon the death of the second parent.
With all estate planning options, there are pros and cons to consider. These decisions involve both legal and financial issues that should be discussed with an attorney and/or a financial advisor. Transfers during your lifetime may help with continuity and reduce expenses. However, such transfers require that you give up some or all of your ownership interest. This means you may also be giving up some control when it comes to the assets you have transferred. At Irvine Law Firm, we are available for phone or video consultations to discuss your options. We can also answer your questions by email. If you know that you need a Deed, we are glad to draft it for you and advise you how to have it executed and recorded.
Take the next step. Explore your options. Get your questions answered. Make a plan.