Developing a comprehensive estate plan seems to get more challenging with every asset you acquire. From family homes and vehicles to digital assets and a private business, it takes significant planning to ensure your end-of-life decisions are meticulously detailed.
Many individuals struggle with accounting for an investment property in their estate plan. If you own rental properties or other income-generating properties, you have several options in how to include them in the estate plan, such as:
- Leave the property to beneficiaries: Like any other property, you can choose to simply leave the investment property to an heir. You will continue to own and manage the property until your passing.
- Create a living trust for the investment property: If you place it in a living trust, you retain control of the property as the trustee. In the trust, however, you can designate a beneficiary to the trust and the property will transfer to this individual after your passing.
- Create an LLC to hold the title: Like the living trust, you can retain control of the property and income that is generated from your management. Designing the limited liability company around the investment property can help limit liability, but there could be tax consequences associated with this decision.
There is no one-size-fits-all answer, unfortunately. Individuals will draft their estate plan to cover the unique variables in their asset distribution goals. It is wise, however, to take the time necessary to properly plan for contingencies and create an estate plan that covers numerous scenarios. It is helpful to seek the guidance of an experience legal professional to tailor suggestions and raise concerns based specifically on your circumstances.
People rely on the estate plan to not only prevent future familial disputes, but to ensure loved ones understand and follow their end-of-life wishes. Do not pass up this opportunity to provide guidance and directions to your surviving loved ones.