Why You Need A Real Estate Attorney

Why You Need A Real Estate Attorney

3 Estate Planning Tips That Can Help You Minimize Probate Costs

by Dwight Washington

You've worked hard to build an estate with assets and funds to leave to your heirs when you're gone. Chances are that you don't want to see the value of that estate reduced by excessive probate costs. You want your heirs to inherit as much of it as possible, preferably with as little fuss as possible. Take a look at some things you can do now to help minimize probate costs and make it easier for your heirs to take control of their inheritance when the time comes.

Joint Ownership of Assets

One simple way to ensure that property or assets pass directly to a surviving heir is to put the property title or account in both names. When you have joint ownership, with the right of survivorship, the surviving party assumes full control over the property upon the death of the other owner. This method is commonly used to leave property or other assets for spouses.

The exact details of joint ownership depend on the laws of your state. For example, around half the states in the U.S. allow tenancy by entirety for all kinds of property, and a few other states allow it only for real estate. Under tenancy by entirety ownership, you can't sell or modify the property without both spouses agreeing to the change. However, once one spouse passes away, the other receives full control over the asset.


Depending on your situation, there may be a benefit to gifting some of your estate while you're still living. You are allowed to give a gift of up to $14,000 per year without needing to pay gift taxes on the amount. If you have a particularly large estate and want to give a larger amount of money, you can still avoid taxes by subtracting that amount from your lifetime gift exemption amount, which is 5.45 million as of the 2016 tax year. You will have to report the gift to the IRS, and you should definitely consult a tax professional first to ensure that you follow the IRS rules to keep your tax exemption.

There are two benefits to giving large gifts – you reduce the overall value of your estate, which means that there is less there to put through probate later. And you get the pleasure of seeing your heirs benefit from your estate while you're still living. Gifting is commonly used as a way of passing money or assets on to an adult child. The gifting rules apply to property or stocks as well as cash, so you can give something other than cash if that's a better fit. Also, money that you spend on someone else's educational or medical expenses is not considered a gift, so you can "gift" someone with their college tuition or needed medical care without reducing that $14,000 yearly limit or 5.45 million lifetime limit.

Revocable Living Trusts

A revocable living trust is a way to designate where you want your assets to go after your death and have them available to those beneficiaries fairly immediately. Basically, you set up the trust, name your beneficiaries, name a trustee to distribute the assets after your death, and lay out how you want the assets divided up, if you have multiple beneficiaries. Then, the assets that you've designated go into the trust. You have full access and control over them, but they essentially belong to the trust at that point.

Because the trust is revocable, you can make any changes you want or need as long as you're living. However, upon your death, the trust becomes irrevocable, meaning that it can no longer be changed at that point. Your named trustee then distributes the assets as designated, without the need to put them through probate.

A revocable living trust is a convenient way to distribute a large estate among multiple heirs without paying a lot of money in probate costs. It even comes with some additional perks – for example, while your bank account is only FDIC insured up to $250,000 per account, in a revocable trust, any bank accounts are insured up to $250,000 per named beneficiary, to a maximum of $1,250,000. So, a revocable living trust is also a good way to get some additional protection if you have large sums of money in the bank. However, these trusts are also tricky to set up, and you'll need legal guidance to help you avoid expensive mistakes.

Understanding the various rules around inheritance and probate is essential for anyone with a substantial estate. An experienced probate attorney in your area can help you create an estate plan that's right for you and your family.


About Me

Why You Need A Real Estate Attorney

Do you understand the legal jargon involved with a real estate transaction? Neither did I until I started buying houses every few months. When I started flipping houses, it forced me to become much more familiar with real estate paperwork. Unfortunately, I realized that a few of my earlier mistakes may have led me to make errors that cost me money. From that point on, I decided to hire a real estate lawyer to go over all of my paperwork before it was submitted. After I started working with my lawyer, it was incredible to see how much easier things were.