Estate Planning for Seniors With Multiple Properties

Seniors who own multiple properties have unique estate planning challenges. It’s a good problem to have. But if you’re in this situation, you’ll need to develop a strategy to pass your valuable assets after your passing.

You’ll want to know the basics about deeds, wills, and trusts. Tax implications? Yes, those too. You’ll want to consider how simple or complex your estate plan is structured. How will this affect those who inherit your assets?

Let’s take a look.

Where to Begin: Inventory

List your assets, including:

• Your homes, by location, value, and current loans and liens.

• Your accounts and investments.

• Your personal valuables.

The first order of business is to go down the list, and decide who will receive which property. Once you’re clear on how you want your assets to be distributed after your lifetime, you’re ready to review the legal vehicles that support your goals and wishes.  

Say my home goes through probate. What type of deed will my beneficiaries get after I die?   

Matching Deeds and Wills

You need a will, but be sure it matches what the deeds to your homes actually say. Imagine that your deeds name a co-owner with rights of survivorship, for example. Upon your death, the property bypasses probate and goes to your surviving joint owner(s).

If this is the case, then don’t leave the homes to someone else in your will. Where a will conflicts with a deed, your deed controls. So, check the deeds to your homes. Be sure they reflect your intentions.

There are multiple ways to keep homes out of a costly and public probate process. Some states have legalized the transfer on death (TOD) deed for real estate. It’s a relatively simple way to choose a beneficiary, bypassing probate.

If you haven’t done so yet, make a will. Refer to your inventory — which you can keep together with your will. Leave clear, detailed directions on how you want the homes and other assets distributed. Name your executor — the representative who will manage this task.

Before signing your will with the notary and witnesses as your state law may direct, ask your attorney or tax pro for guidance in planning for possible estate or inheritance taxes. 

Understanding Domicile

Your domicile is your state of primary residence. That’s where you vote and pay your taxes and where your estate will go through probate — and possibly owe that state’s estate tax.

When you hold more than one deed, it’s helpful to declare that you are domiciled in a particular state in your will and/or trust paperwork.

The state you mainly live in isn’t the only state whose laws affect you. For each home, laws of the state where the home exists are controlling.   

Imagine you are domiciled in Ohio, and own another home out of state. Now, say you deed your out-of-state home to your LLC based in Ohio, your domicile. If the other state considers your LLC an Ohio asset, it won’t require you to pay estate taxes in your second home’s state. But how this plays out is up to state laws.

Selling or gifting property may avoid estate tax in another state, but be careful to safeguard your long-term healthcare planning.

Consolidating Homes Into Trusts

Trusts can make sense for individual homes, but they can make even more sense for multiple homes. Consider the homeowner who has a second home out of state. That second home will be subject to the probate court in the county and state where that property exists. How inconvenient for your personal representative, right? But it can be averted with a revocable living trust.

Quitclaiming the homes into a revocable living trust lets you keep control over the properties in your lifetime. You can change your mind about the trust and revoke it. After your death, the homes will go to the beneficiaries you’ve named in the trust. Probate won’t be needed for the assets in the trust.

Some deed holders might instead form a business entity, such as a limited liability company (LLC). Less commonly, people use irrevocable trusts. These trusts make sense in certain circumstances for asset protection, or to prepare for a beneficiary’s special needs.

Deeds.com offers financial power of attorney forms; select your state to find your county. With these forms, deed holders can designate a person to make financial decisions for you if you become unable to do so. 

Before You Go

Check your estate plan every few years or after shifts in your health, your family and social ties, or your financial situation. At the same time, think about how people will respond to your wishes. Talk to those close to you about what you’re deciding to do. Communicate today. Avoid confusion after you’re no longer around to clarify.  

Working with a wills, estates, and trust lawyer to make sure your wishes are clearly expressed, and correctly stated under the law.