What is the best way to pass real estate to your heirs?

Question

Does anyone know how best to transfer real estate to your heirs?  DO you create a trust or something?

Rich Weese · Answer

I have to disagree with some of the info posted here on this topic. Here is my view. My wife and I have a first to die trust. First spouse to die has assets divided into 3 trusts. One for surviving spouse in a survivors' trust, one for an exemption trust of the deceased up to exempt amount, and the  balance to a survivor trust . These eventually work their way down to a generation skipping trust that is an IRREVOcable trust for asset protection set up for grand kids and future generations.     Certain requirements for them to qualify for a portion of funds. This is all in an irrevocable family trust for their benefit. It skips some of the estate costs and taxes. My wife made me purchase a substantial life insurance policy (term) to pay a significant portion of the estate taxes that will be due.
     I"M NOT AN ATTORNEY, but paid a ransom for this info. I avoid the taxes by just selling, continue the growth of the estate, pass much of it on with no taxes and leave a legacy for future generations. My wife and I direct it, but have no liabilities to lawsuits etc. We also live an enjoyable life, travel a lot, give some away and look in the mirror each day and feel good. Rich.

Rich Weese · Answer

Steve- Thanks for the vote. I went to the old thread and agreed with it and voted for it. I was on a cruise and missed it originally. A lot of the time, the BP nation just stands there and watches the info go bye and act like vegetables. What makes this site better is the interaction, opposing views and constant changing of subjects and material. There are many on BP that try to reply to questions  and add info as time permits. Thank them when they help you out. Rich.

Rich Weese · Answer

first to Steve- My estate was set up before Edelman wrote his first book, which I do reccommend highly. I spent lots of $$$$$ to keep IRS from getting in as my partner. I continue to do the same. My estate is in great shape, bullet proof and even has a nice "poison pill provision". I have no worries about the tax consequences in my lifetime ,,,or the grand kids' lifetime. Unless the tax rules are changed and made retroactive.
    Jay- your dad is a very successful FOOL. He is probably too old and too tired to care. There are so many things he can do to keep his estate growing. You should try to find someone he has confidence in and have that person lay it all out on the line. I had my dad do everything neccessary before his death and it was SO smooth, I'll definitely thank him in the hereafter. I love you POP. Rich in Fl.

Rich Weese · Answer

Steve- I will blog  it. I got chastised by the Mods for blogging and tieing it back here, so I don't really know how to do that. I even asked if I should Blog or Post because I have the impression that doing both is a no-no. Rich.

Rich Weese · Answer

Hi Steve- I thought that would be of interest to people also. Then, I noticed no one had voted for my post in this thread on the same subject! For the biggest obstacle to creating real wealth(taxes) to not be of interest did surprise me. I'll still consider it as a blog. Thanks for the suggestion. Rich in FL.

Steve Babiak · Answer

Rich,

Thanks for the clarification.  So the fact that your estate plan has some things in common with what Edelman writes is simply one of coincidence - or two relatively smart people grasping the tax code in similar ways.

As to high net worth - I just threw that in to help grab attention.  But the other part about offering details on the blog - the what and the why and how - well, that is something I think we all would appreciate learning.  Just my $0.02 worth on that.

And you know I'll always pass along suggestions for good blog topics especially when I recognize that you have knowledge / expertise / wisdom on the topic above the average reader.

Will Barnard · Answer

You have my vote also Rich, I just found this thread topic and it is a great one. Shame on the bad guys for not allowing this to be in as many places as possible as it is an important aspect of investing.

Kevin Yeats · Answer

This is a terribly complicated topic.  A lot may depend on the state of residence and the state in which the property is located.

I suggest, at the very least, consult an attorney who regularly practices estate planning issue.  It may be wise to contact a financial planner as well especially if your estate will trigger the estate tax - Federal or state.

The Federal Estate tax was repealed during the Bush year BUT that repeal is repealed (I believe in 2011).  Given that Congress has to do nothing to reenact the Estate tax, I'd bet $1 to anyone that it is reinstated.

Another issue are Medicaid rules.  Hopefully, no one here is near that low level of wealth but Congress passed a law allowing for a 5 year lookback period to determine eligibility for Medicaid.  If a parent goes into a Nursing Home and those expenses are paid for by Medicaid, many states can and do go after the residence after the nursing home resident and spouse have died.  Again consult a professional for specifics.

Above all, these issues will change frequently over the next decade.  Everyone's situation is different.  Hiring a professional is a wise choce.

I would not recommend LegalZoom or any other do-it-yourself road for legal paperwork.

[I am NOT a lawyer but have worked with some knowledgeable lawyers in the past]

Mark N.A · Answer

If your estate will trigger inheritance taxes you should spend good money consulting with a good estate planning attorney.

As a rough example, because real estate is considered 'illiquid', there are ways to transfer it to your heirs now, pay the taxes now on a discounted basis with you keeping control, yet when you pass away all the appreciation will belong to your heirs free and clear.

Howie NA · Answer

I've never thought about it like that.  That is great advice, Charles.  (being genuine, not sarcastic)

What is the best way to pass real estate to your heirs?

Most Popular Reply