Estate Planning Instruments for Transferring Real Estate

For many people, real estate properties are the most valuable assets they own. Personal residences, vacation homes, and other real estate properties also have significant personal and sentimental value. 

Many people include their home in their will, but there are many different estate planning instruments above and beyond a will that allow for the transfer of real estate. If you intend to leave one or more real estate properties to your loved ones, make sure you are using the right legal tool for the job.

Joint Tenancy with Right of Survivorship

Married couples often set up a Joint Tenancy with Right of Survivorship for real estate. This tool allows multiple people, often close family members, to own real estate together. When one owner dies, their interest in the property automatically passes to the surviving owner. This makes the transfer of assets much easier upon an owner’s death and avoids probate when the first owner passes away. 

However, the Joint Tenancy with Right Of Survivorship may end up in a probate scenario if both husband and wife are in a common accident. It escapes the first probate of the person who is deemed to have died first, but it ends up in a probate of the second to die. 

Living Trust 

As the name implies, a living trust is set up during your lifetime and takes effect immediately. You maintain control of the real estate property placed in the living trust. Then, upon your death, the property is transferred to your designated beneficiaries. 

Unlike a Joint Tenancy with Right of Survivorship, using a living trust and transferring the title into the name of the trust is appropriate to escape probate for both owners of a property. It also designates who the beneficiary will be upon the second death or states whether the house should be sold.

Transfer on Death Deed

Transfer on death deeds or beneficiary deeds can simplify the asset transfer process, avoid probate, and reduce expenses.

Qualified Personal Residence Trust (QPRT) 

One of the key goals of any estate plan is reducing the amount of money that goes to Uncle Sam. A Qualified Personal Residence Trust (QPRT) is an estate planning instrument that allows you to do just that. This irrevocable trust is used to transfer a personal residence to beneficiaries while reducing gift taxes.

Limited Liability Company (LLC)

Investment properties, such as rental properties, or even family farms, should be held in a limited liability company to protect other assets against liability on those properties. For instance, suppose someone is injured on a rental property and obtains a judgment against the property owner. If the owner is the individual, all their assets are exposed to that judgment creditor. If the owner of the property is the LLC, all other assets owned by the person individually are protected. 

Furthermore, the ownership of the LLC should be the living trust so that the successor trustee can take care of things in the event of a common accident. Otherwise, that LLC may be a probate asset, too.

Contact Our Naperville Estate Planning Lawyers

If you are interested in transferring one or more real estate properties to your loved ones, our Naperville estate planning attorneys can help you determine the best way to do so. 

Many different estate planning instruments are available in Illinois, and choosing the instrument that makes the most sense for your particular situation can be daunting. Fortunately, our skilled attorneys have the experience and legal knowledge needed to help you make the best choice. Call our office at 630-756-1160 today to set up a confidential consultation.

Source:

https://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=3382&ChapterID=60