Real estate investors are keen on choosing the right property investments to provide them with a steady flow of passive rental income. If you’re a real estate investor, there’s no doubt that you’re an expert in negotiations and closing deals with sellers. Now, you have come to a point where you ought to start planning your estate.
Estate planning ensures the orderly and legal transfer of assets and real estate properties to the beneficiaries. But, how should you go about estate planning?
In this article, you’ll learn some crucial tips on estate planning for real estate investors to keep you guided.
1. Consult A Trust And Estate Lawyer
Ensure that your wishes will be granted after your death by making an end-of-life plan. Creating an estate involves transferring ownership of your properties to your intended beneficiaries after your death.
If you want your loved ones and other people or institutions to receive your possessions, then you need to outline these stipulations on your estate. Your estate also allows you to designate a specific individual as the implementor or executor of your estate, supervising the proper transfer of ownership to your beneficiaries.
A trust and estate lawyer can help real estate investors in estate planning. If you have several assets, legal matters can become too complicated if you also have several beneficiaries. So, you want to ensure that your estate plan complies with estate laws to avoid untoward problems.
Real estate investors can search for reputable estate planning lawyers online at huberfox.com or other similar law firm sites.
2. Write A Preliminary Draft
Once you have an estate planning attorney to guide you, the next step you need to do is to write a preliminary draft. Draw up a will. Think about all your properties and assets, and the people you’d like to receive those, a.k.a. your beneficiaries.
When writing a draft for your will, you need to consider the following:
- All Your Properties And Assets: List down all details concerning your real properties and assets, leaving nothing hidden from your lawyer to ensure your beneficiaries won’t face any legal issue in the future.
- Your Minor Children: Your minor children need a guardian to handle their inherited assets, so make sure to assign an executor you can trust, and one who has genuine love and concern for your family.
- Desired Share Or Assets For All Beneficiaries: Outline in your will the percentage or details of assets you want to give to each beneficiary. For instance, you might want to level your vacation house to your youngest child and your family house to your eldest son. Since a draft is still temporary, you can make changes later on once you’ve finalized everything.
3. Make A Living Will
A living will or advance directive refers to a legal document providing instructions regarding your desired medical care when you become seriously ill or can’t communicate because of disability or incapacitation. Some examples of instructions include the use of life-sustaining measures, like mechanical ventilators and feeding tubes.
4. Consider A Living Trust
This written legal document allows your assets to be placed into a trust and, then, transferred to designated beneficiaries after your death, facilitated by a ‘successor trustee’ or a chosen representative.
5. Get A Life Insurance
A life insurance policy protects your estate and beneficiaries from paying a large amount of estate taxes and debt. If you have several properties on a mortgage, it’s a wise move to obtain a life insurance policy that’ll cover them after you pass away. By doing so, your heirs will still receive the properties you left for them without using portions of your assets to pay off your loans and other debts.
6. Address Your Estate Taxes
Estate taxes may include federal and state taxes. Make sure that you’re aware of your tax obligations and settle them immediately before it’s too late. Talk to your probate or estate planning lawyer to determine the right amount of estate tax applicable to your real estate properties.
Check how much property taxes apply to your real estate properties, especially your commercial and luxury properties. Find out whether your country or state has inheritance and death taxes that can affect your estate. Some state taxes have a lower threshold amount than federal estate taxes.
Estate planning for real estate investors should always involve legal assistance from a qualified and experienced trust and estate lawyer. It’s important to create a draft of your estate first and carefully think about your intended beneficiaries, including the asset shares you want to give to them, for a more informed estate decision-making. Ensure that your estate plan paperwork is kept secure to a trusted facility or safe that your lawyer and executor can easily find.