When we think of estate planning, we immediately think of wills and trusts, along with who we designate as our beneficiaries. Moving past the initial legal documents, keeping accurate real estate records is one of the most overlooked, yet beneficial things you can do to ensure your real estate assets are transferred as smoothly as possible. Even the best estate plan can be undermined by incomplete or inaccurate real estate records, leaving your heirs out to dry when it comes time to transfer the property.
Clean Up Your Property Records
By keeping accurate, up-to-date deeds and ownership records for your properties and assets, you greatly reduce the likelihood of future disputes about your final wishes or who truly owns each real estate asset. When the inevitable time for probate has come, your executor, heirs, and beneficiaries will have the specific documentation necessary to move the process forward quickly and with fewer headaches from complications caused by otherwise avoidable errors.
Trusts can also be simplified with these same records, through confirmation that your various real estate holdings have been titled into the trust. Keep in mind that signing trust documents does not move your real estate into it; rather, you must sign and record a new deed. However, you can make these changes only while you’re still living. If your heirs must scramble after your passing, they’ll be facing problems that could have been easily prevented. Creating a trust does not automatically transfer title to your properties within it. Be diligent to make sure your assets have been properly transferred into your trust. Consider continuing your engagement with your estate planning attorney to ensure you complete all necessary actions.
Review Your Records While You’re Still Living
Don’t leave the task of resolving errors in your property records to your executor(s) during an already difficult time. Here are some questions to ask yourself. First, is this property titled solely in an individual’s name or is it held jointly? Has it already been placed into a trust? Remember, confirming the deed has been transferred into a trust is essential, or else it remains outside the trust.
Be sure to solidify your understanding of how your property will transfer to your heirs after your passing and how each tool works in dividing your assets. There are several ways, all of which are equally important, including:
- A last will and testament
- A trust
- A beneficiary deed
- A joint ownership with rights of survivorship
- A deed transfer upon death
While joint ownership with rights of survivorship can simplify asset transfers, complications may arise from unintended taxes, such as a partial step-up in basis instead of a full one. This can increase capital gains taxes if your heirs sell the property later. Tax advantages can also be reduced or even eliminated in some situations if the entire property’s value is pulled into your taxable estate
Moving real estate into a trust most likely results in losing property tax exemptions, like homestead and age-based exemptions. Reapplying for exemptions is essential. Another mishap is conflicting instructions in a will and testament and the trust agreement, which can spark a legal battle among heirs.
Once your property is placed within a trust, your mortgage and your homeowner’s insurance policy will need to be updated to reflect the change. Your trust must be designated as an insured or additional interest; otherwise, claims can be denied.
By performing a simple review of your titles and ownership documents, you’ll be able to identify and correct any previously unknown issues.
Daily Money Managers Work with Attorneys and CPA’s
During this document review process, your Daily Money Manager becomes a part of your financial team and collaborates with your CPA and estate attorney to provide the pertinent documents necessary to make any essential changes or updates. While you’re still living, your DMM helps ensure your records remain clean and up to date so every property transfer runs smoothly after your passing.
By ensuring your property records are current and placed within a trust, you’re giving a gift to your heirs and loved ones by having it all handled beforehand without the added heartache of unexpected complications.
At Organized Instincts, our certified Daily Money Managers specialize in making sure accurate property records are kept. Reach out today to discuss how a DMM can help you create an easier path forward for those you love.