Many of you believe that real estate planning is not required for you at all as you don’t own a real estate. You may also be under the notion that the value of your real estate is not large enough so as to result into real estate taxation. So, you may be thinking – what is the logic in putting in place a comprehensive real estate planning? But the fact is that all of you, barring some exceptions, own real estate. If you possess something which entails some value that you wish to pass to someone else upon your demise, then you own a real estate. If you don’t make a will for your real estate, then your property will be distributed among your heirs upon your death as per the prevalent laws in your state. However, if you make a will, then your properties will be distributed upon your death as per the will made by you. That is why putting a will in place is very important and real estate planning includes conservation as well as the distribution of properties. Two key aspects related to estate planning are listed below.
Will: The basis of estate planning
Will is the backbone of estate planning. It actually contains how you want to dispose your properties to different parties upon your death. By drafting a will, you can control what happens after you die. A will is not enforceable till you are alive. Before your death, you can change the will as per your wish and priorities. A will should also mention the name of the executor. The executor will be responsible for the disposition of your properties as per the will upon your death. If you don’t make a will before your death, this means that you would not have any say on who receive/s your properties and by what amount. Anyways, irrespective of the presence or absence of a will, upon your death, your real estate will go through a probate. This is nothing but the monitoring of the disposition of your real estate among the beneficiaries.
Trust: An add-on to a will
You can also set up a trust for your properties. A trust is responsible for distributing your assets to the beneficiaries in a smooth way. A living trust is effective when you are alive. A testamentary trust, which is also known as a will trust, becomes operative after you die. Since you have all the rights to change your will, the terms and conditions of a will trust can also be changed. Again, a living trust can also be set up as a revocable or an irrevocable one. In case of a revocable living trust, the grantor has the access to the corpus until he/she dies. Again, in case of an irrevocable living trust, the grantor has no access to the corpus. For managing your estate in a better way, setting up of a trust is very important.
Will and trust are two basic things in a real estate planning. You should have these things in place for controlling and managing your real estate in a better way upon your death.