When structuring one's estate, it is important to address each and every asset type differently. For example, cash held in a savings account will be handled differently from an investment account. A treasured stamp collection will need a different approach than shares in a business venture. Real estate offers yet another type of asset, and Philadelphia residents should understand how to incorporate real property into the larger estate planning picture.
When it comes to real estate, transferring assets is more complex than many other types of assets. Real estate cannot be passed down via a designated beneficiary, which is an option for many types of investment and bank accounts. If the property has not been placed in a trust, it will likely have to go through the probate process. That means that any maintenance expenses will need to be handled through the executor, as well as repair issues that might arise during the time of probate.
One way to simplify matters is to create a life estate. That estate planning tool allows the homeowner to transfer ownership of the property to the desired party, while also retaining the right to live in the home for the rest of the owner's life. When the owner passes away, the property immediately passes down to the named beneficiary, outside of probate.
As with all estate planning tools, there are pros and cons associated with a life estate. Each family will have a unique set of needs and goals, especially when it comes to how real estate should be handed within an estate planning package. Fortunately, there is a solution to fit virtually every set of circumstances, and Philadelphia families should investigate all of the available options.
Source: marketintelligencecenter.com, "Proper asset titling: Estate planning and your home", Joe Favorito, Sept. 30, 2016