Homes are one of our most valuable assets. Along with being a financial investment, your home is also a place full of memories. You have probably spent countless hours in your home and have come to love the property that is yours. When it comes time to plan for the future, your home should be at the forefront of your mind. It is essential that you take time to include your home in your estate plan and carefully evaluate what will happen to the property. When it’s time to plan, there are a variety of different paths you can take.
First of all, you can create a legacy provision. This is a revocable trust that will allow you as the resident owner to determine how the household will be preserved in the future. You can transfer the home to another family member using a legacy provision, and then give instructions to go along with your transfer. For example, you can insist that the home will never be sold, or stay that you want it to remain in the family. By setting these boundaries, you will be able to control the future of your home, even from a distance.
When you pass away, your appointed trustee will have to continue to fulfill these obligations. Depending on how much you trust your beneficiary, you can give him or her broad discretionary powers or limited and detailed instructions. You can also leave behind money to help fund the property’s upkeep, or you can will the money to your heirs for this purpose. Legacy trusts are most often used for family homes such as summer and winter vacation homes, but they can be used for primary residencies as well.
You can also make specific bequests. These are trusts that convey property to specific heirs and the costs of the real estate is handed over to the new owners. Sometimes, specific bequests can get complicated if there are multiple families involved. If you have four children, all married, and will the home to all of them, then the siblings may become confused and irritated as to what to do. In this situation you may want your trustee to sell the home upon your passing and dole out the proceeds to your heirs. A lot of times a specific bequest can state that you want the house to remain in the heir’s possession until a surviving spouse has moved out or passed away. This can assure you that your husband or wife has a safe place to live after you have passed on.
You can also create a charitable intentions trust. This trust is like a specific bequest, but the bequest is granted to charity rather than a beneficiary. The trust can convey the home or instruct the trustee to sell it and donate the proceeds to the charity that is named. The trust often also includes provisions to allow the surviving spouse or family members to use the residence for an allotted amount of time before it is sold or donated. This is an excellent option if you don’t have any heirs that you want to grant your property to when you pass away.
The last type of trust that you can purse is an options trust. This allows you to give a named heir the option to purchase the home. If the heir declines the purchase, then the option is conveyed to a second named heir. These options go down list, normally ending with a charity, The IRS rules require that any inter-family home transactions are at a fair market value. With all of these options wide open to you, it shouldn’t be hard for you to find a home for your home after your death. Talk to a probate professional if you need aid in drafting your will in the future. It’s never too early to start planning, so get in contact with someone today!