Wednesday, November 18, 2015

The best inheritance: A succession plan for family real estate

You had the foresight to invest in real estate. But have you had the fortitude to plan for its future?

Most real estate and legal experts will tell you that a plan for family-owned property is essential—for the family and the value of the investment. Often, it is not an easy conversation to have with family members. That’s where the fortitude comes in. Whether transitioning to a new owner or an outright sale, these five steps should be part of your discussion.  

  1. Plan for real estate tax liability. You don’t want your family to be forced to sell the property to pay real estate tax debt. Planning gives your heirs more options.
  2. Consider tax-friendly ways to transfer assets. Gifts and trusts are among the tools that offer owners significant tax benefits.
  3. Tell heirs your plan and don’t wait to resolve any issues that arise. Let them know how you arrived at your decisions and share your vision. This conversation can help preserve the relationship between the children or grandchildren, and it gives them an opportunity to ask you questions and for your advice
  4. Revisit the plan regularly. Some tools require more regular monitoring than others.
  5. Introduce your heirs to your advisers. Let them know who you trust for financial, tax and legal advice.

The recurring mantra is: It’s never too early to plan for when you can no longer make the decisions regarding the family’s assets. The biggest gift you can leave your family may be a legal document on how you give it.