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Alexandria, VA Estate Planning Blog

Saturday, March 31, 2012

Estate Planning Real Estate

 

Estate Planning Real Estate: 

 

Owners of real estate should consult an estate planning attorney about preventing duplicative probate proceedings and the forced sale of real estate by the court.

 

Estate Planning Real Estate: What is Estate Planning for Real Estate

 

Estate planning for real estate involves ensuring that real estate is distributed to the estate beneficiaries at the lowest financial cost and burden. Estate planning real estate transfer techniques include trusts, tenancy by the entireties, joint tenancy and business entities. Two estate planning issues for real estate have been discussed below.

 

 

1. Estate Planning Real Estate: Estate Planning Issues (Duplicative Probate)

 

Real estate is problematic for estate planning purposes. If you own real estate located in another state, then you may likely have to probate your Will in multiple jurisdictions (resulting in significant delays and costs). Because each state has jurisdiction over the real property located within its jurisdiction, the decedent’s Will may have to be probated in every jurisdiction where the decedent owns real property in their own name.

 

E.G., A is a resident of Virginia. A owns real estate in California, Florida and Texas. A’s Will will have to be submitted to probate in Virginia (home state), California & Texas. 

 

Estate Planning Real Estate Solution: A could create an estate planning living trust and title each parcel of real estate into that estate planning trust. Consequently, A’s Will may not have to be probated in any jurisdiction (not even Virginia).

 

   

2. Estate Planning Real Estate: Estate Planning Issues (Partition)

 

Real estate may be subject to partition in the hands of your beneficiaries. Partition is the process of dividing and selling real estate in accordance with the respective owners’ interests. Consequently, if you leave real estate outright to multiple beneficiaries, than any beneficiary can bring a partition proceeding to force the other beneficiaries to sell the property. Additionally, that beneficiaries creditors may also stand in the shoes of a debtor beneficiary and force a sale of the land to collect on a debt. 

 

Estate Planning Issues with Real Estate Partition

 

  • Forced sale of real estate during bad market (loss of gains)
  • Land broken up and no longer owned by the family
  • Tax consequences on forced sale of real estate
  • Real Estate subject to creditors, bankruptcy, divorcing spouses & Medicaid

 

Estate Planning Real Estate Solution: Create an estate planning living trust and title the real estate into that estate planning trust. Include provisions to prevent sale and creditors ability to get to property. Consequently, real estate could be protected from judicial sale by partition.

 

 

Have Questions? Contact our Firm via phone (703.349.2742) or email (contact@oldtownattorney.com)  

 

 


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