Putting measures in place to ensure your Fort Lauderdale luxury home is passed on to loved ones upon your death can be relatively simple — as long as you’re willing to do a little planning. We’ve compiled three popular ways to leave your home to loved ones. Review the Pros and Cons of each and choose the solution that works best for your situation.
3 Ways Of Leaving Your Home To Loved Ones
1. Put your home in a will.
When drafting your will, you can include tangible assets like your home. The will provides instructions on how to distribute your assets and to whom upon your death. For example, you can leave your home to multiple children or loved ones and direct them to sell it and split the proceeds.
Pros:
• It’s relatively simple to include your home among the assets distributed after your death. Have a conversation with your attorney about including it in your will.
• If your loved ones sell the property, they’ll likely pay capital gains taxes based on what the home was worth when they inherited it.
Cons:
• Your heirs will have to go through the probate process, which can be expensive and time consuming.
• Your will may become a public record that anyone can view.
2. Add your home to a revocable living trust.
A revocable living trust is an estate planning tool that you can use to control who will get your tangible assets when you die. The trust is called “revocable” because you can change it at any time and “living” because you make it during your lifetime. In the trust, you name a trustee (that’s usually you) and a successor trustee (the loved ones you want to inherit your home). Once your trust is set up, transfer your home into it and when you pass away, your successor trustee takes control of the trust, and therefore, your home.
Pros:
• Your heirs get your home upon your death without having to go through the expense and time of the will probate process.
• If they sell the property, they’ll likely pay capital gains taxes based on what the home was worth when they inherited it.
Cons:
• Setting up a living trust can cost thousands of dollars.
• If your children or loved ones are young, you’ll need to designate a trustee to manage the trust and home until they’re old enough to manage it on their own.
3. Add loved ones to the title of your home.
You can give your home to loved ones by adding them to the title of your property as joint tenants (or joint tenants with rights of survivorship).
Pros:
• When you die, your loved ones automatically own the property without going through the probate process.
Cons:
• There are often significant tax consequences when you give someone valuable property.
• If your loved ones sell the property, they’ll likely pay capital gains taxes based on what you first paid for the property.
• You can’t change your mind and take back your home without consent from all parties.
• If you want to refinance or take out a mortgage, your loved ones will have to agree.
Contact us if you need help considering your options for leaving your home to loved ones. We can refer you to a trusted local attorney, who can help explain these and other options. Keep in mind that tax laws and tax rules are constantly being updated and interpreted. Since this article contains general information, please be sure to discuss your individual situation with a trusted tax adviser before making tax decisions.
