This article summarizes three of the most common types of real estate addressed in an estate plan.
Personal Residence
For most families, a personal residence is one of the most significant assets to consider when creating an estate plan. Ordinarily, your residence can be transferred through numerous mechanisms, the most common of which is a living trust, or a transfer on death deed in some cases. The method you chose can have a significant impact on the tax implications for your heirs. For instance, placing the home in a living trust can avoid probate, which is an expensive and time-consuming process in Hawaii, can simplify the transfer process to beneficiaries, and potentially provide tax benefits.
Residential Rental Properties
Residential rental properties present their own set of challenges in an estate plan. These properties can serve as a steady source of income or be sold to distribute the proceeds. If they are not sold, they will require management and maintenance, and an agreement among the beneficiaries among how they are used.
Commercial Properties
Families with multiple commercial investments may decide to establish a Limited Liability Company (LLC) or a Family Limited Partnership (FLP). These entities allow for the properties to be managed collectively, enabling more effective operation, and providing a measure of protection from personal liability. This also facilitates simple transfer of properties through shares, which can be gifted during your lifetime or bequeathed upon death, potentially mitigating estate tax liability. Our firm will help guide you to make the best choice with respect to your real estate, whether it is your home or an investment, and avoid the most common mistakes that can have potentially undesirable effects.