In terms of your personal property, few assets are as valuable as real estate. Transferring real estate will usually trigger probate oversight for a Pennsylvania estate, regardless of how much the property is worth.
Many adults only have to worry about addressing their primary residence in their estate plans, but some adults will have far more real estate to bequeath to others. Whether you run a residential rental business or purchase vacant land as a long-term investment, you need to think about what will happen to those properties after you die.
Transferring real estate after your death can have many implications, including possible tax liabilities and the risk for massive disputes among your beneficiaries. What are some of the potential estate planning solutions for real estate holdings?
Assign specific properties to certain individuals
If you have 12 rental properties and four children, you might decide to lead three properties to each of your children. Assigning properties based on location, value or even the sentimental history someone has with the property can allow you to decide which family members should receive which of the properties that you currently own.
Give your loved ones the first right of refusal
Maybe you have children who had expressed an interest in following your career path, but you don’t want to leave real estate to all of your children. You might give your children the option of buying the property from your estate at a fair market value.
Inheriting residential real estate of any sort can be as much of an obligation as it can be a benefit, so giving your beneficiaries the choice of whether or not to purchase the real estate could be a good solution.
Order your executor to liquidate it all
If you do not have family members that live nearby or you have no reason to suspect they want to hold those properties after your death, the easiest solution might simply be to instruct your executor to sell your real estate. They can then pull the proceeds from those sales to settle your accounts and distribute the remaining proceeds among your beneficiaries.
Each of these approaches will require different legal paperwork and will have different tax implications. Thinking about your real estate holdings and your family relationships can help you create an estate plan that properly handles your investment properties.