As an apartment owner, you have worked hard to build wealth through real estate ownership. Many owners have spent countless hours to care for and maintain the properties that they own and are proud of. It is vital that you have a current estate plan in place, to ensure that your assets and wealth are protected to the fullest extent. In this episode, we had the pleasure to sit down with Attorney Christine Brown of South Bay Elder Law and Estate Planning to discuss the basics of estate planning, as well as specific actions and items that you need to consider as an apartment owner.
1. What is estate planning?
It is a plan consisting of a number of documents that should be in place in the event that you become incapacitated. Having this plan in place allows someone to be able to manage your finances, health care decisions, and the handling of the estate after you pass away or can no longer make decisions on your own. This ensures that the people you want to leave your estate to receive the estate properly. It also gives you increased control over the conditions under which you want the estate to be distributed.
2. What estate planning advice do you have for property owners?
Apartment building and property owners should have these proper estate planning documents in place:
• an Advanced Health Care Directive
• a Durable Power of Attorney for Finances
• a Will
It is also a good idea to have a nomination, in the event that that they have minor or disabled children, so that someone can step in and care for those children. Another important item to have is a trust, as this allows you to transfer title upon your death without going through the probate process, which can be expensive and time consuming. Another benefit is that the trust is also effective the moment you sign it. By doing so, if you become incapacitated, you have already named someone to step in and you manage all of the assets that are in the name of your trust.
3. What are common estate planning mistakes apartment owners make?
The biggest mistake a property owner makes in regard to estate planning is simply not having a plan in place. Lacking an estate plan results in conservatorships and probates, both of which are very expensive and subject to court supervision. Other common estate planning mistakes that property owners make include:
• Not having an updated, current estate plan
- It's a good idea to revise the documents regularly to make sure that everything will still run smoothly in the event that they become incapacitated.
• Adding their children to title as a result of panic or a serious health diagnosis
- In a situation like this, they do not want to add their children to title because it could start potential legal problems. If the children have a lien in their name, the creditors could attempt to seize the property. The children could also face a capital gains tax.
Make sure that you have a trust and a current, up-to-date estate plan so that there is something in place to protect your property. Also, have the proper documents in effect and do everything you can to avoid probate because you do not want to lose all those funds and the wealth you have accumulated to the probate process.
If you need help on starting an estate plan, or need guidance in revising an outdated estate plan, please contact Christine Brown of South Bay Elder Law: