Estate Planning for Your Children

If you have minor children, estate planning is a very important step when it comes to planning for your death. Failing to name guardians for your children in your will can lead to custody issues that are easy to avoid by simply taking the time to decide who you want to take care of your minor children in the event of your death. Determining who will raise your children if you die can be a difficult decision. For this reason alone many parents avoid the issue of custody decisions since they’re unable to find someone who they think will be the perfect guardian.

Avoiding the issue of guardianship is the number one reason why people fail to plan their estate or have a will. By procrastinating the decision about custody parents put their children at risk in the event of their death. Unless you name a guardian the courts will name someone they feel is right for the role of guardian. And this could be someone who you least wanted to have custody of your children. Court battles for custody can be long and drawn out, especially if there is more than one applicant who is seeking custody. This can place a huge financial and emotional strain on your children as well as deplete the assets from your estate. The worst case scenario is that no one applies to take custody of your children. The courts may decide to give custody to someone in your family who really doesn’t want the responsibility or your children may end up in foster care.

When planning your estate try to choose guardians for your children who you know will want to take them. Don’t feel that you have to choose a family member; friends you trust can also be ideal candidates. Consider separating guardianship of your children from the assets of your estate. By naming someone other than the guardian to be the trustee of your children’s money you ensure that there are some checks and balances in place when it comes to deciding how that money is spent.

Always have a backup named for the guardian in the event that your first choice is unable to accept the role. Keep in mind that if you name a couple as the guardian the issue of their breakup may become an issue and this can lead to a legal battle for custody. For this reason alone it’s a good idea to name individuals as guardians. If you’re divorced, consider your ex-spouse as the guardian. Most of the time, your ex will want to have custody anyway. Why make it more difficult by naming someone else as guardian and risking a lengthy court battle?

Why An Estate Plan Is Vital for Real Estate Investors

Estate planning is the process of making arrangements for how you want your assets to be disposed of if you pass away or become incapacitated. Sure, it might not be everyone’s favorite topic, but estate planning is nevertheless an important task that ensures your hard-earned assets are passed down to the right people and organizations. By making your arrangements in advance, you can leave specific instructions for which of your possessions are distributed to whom, at what time, and how.

While estate planning is important for everyone, it is especially important for those with a real estate portfolio–or at least in the process of building a real estate portfolio. Below are important documents to include in your estate plan if you are a real estate investor.

Wills & Living Trusts

Wills and living trusts are both tools used in estate planning. These documents are mainly used to designate beneficiaries for your property in the case of your death, but each option has different applications. Many choose to keep both wills and living trusts concurrently, so as to take advantage of the different benefits.

One of the main differences between a will and a living trust is that a living trust ensures that your property is passed on in private without going through probate, and without challenges from the court. A will, on the other hand, must be filed in probate court and becomes a public document. The property included in a will is subject to probate court and claims, which can be lengthy and expensive processes. There are multiple ways in which estate attorneys use these documents in order to ensure that real property is transferred as smoothly as possible upon an investor’s death.

Lifetime Planning For Investors: Powers of Attorney & Advanced Directives

A power of attorney is a document that gives one person (an agent) the authority to act on behalf of another (a principal). The principal may grant a limited or wide range of authority to the agent, depending on the principal’s needs. This document is often used for those who want to make sure someone is designated to make financial and business matters on their behalf in case they ever become unable to do so due to incapacitation or other reasons. Real estate investors may find granting an agent power of attorney useful for carrying out business functions such as collecting rents, making payments and managing tenants in their absence.

While powers of attorney generally allow someone to make business and financial decisions on another’s behalf, an advanced directive allows you to designate someone to make medical decisions on your behalf when you are unable to speak for yourself. Times in your life when you may want an advanced directive include if you have a chronic, ongoing health condition, are planning a surgery, receive startling health news, or have other concerns for your well-being. If this hasn’t happened to you, that’s wonderful. But the reality is we can all get sick.

Asset Protection & Tax Planning

An estate plan for real estate investors should also include strategies to protect your assets as well as provide tax sheltering strategies for your investments. To begin protecting your assets, start by creating an inventory of your assets and break them down based on how they are owned. Next, take the necessary measures to ensure that your assets can legally be passed on to your beneficiaries. This process can get a bit more complicated for real estate investors who purchase properties with partners or through an LLC. They will need to form a plan for how to to transfer the ownership of their investments, including those with a surviving business partner.

Our Office Can Help

Our office has served many real estate investors. We have extensive experience in how the various estate planning documents are used for investors. Contact our office today if you have any questions about estate planning. We will review your personal circumstances and help execute the best strategy for you, your business, and your heirs.

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