How Can I Transfer Real Estate Investments?

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Real estate investments should be included in your estate plan.

You have real estate investments.

Perhaps your real estate is limited to your own home.

Maybe you have expanded into commercial real estate investments.

According to a recent Motley Fool article titled “How to Include Real Estate Investments in Your Will,” these should be addressed in your estate planning.

What options do you have?

Real estate investments should be included in your estate plan.
Not all states have the same laws regarding the transfer of real estate investments.

A living trust.

You can transfer real estate investments to the trust by transferring the deeds to the name of the living trust.

As the trustee, you can make changes to the trust during your lifetime.

With this option, you can transfer the assets in the trust directly and bypass probate.

Note: if there is a mortgage on the real estate, then this requires special care.

Consult with an experienced estate planning attorney to help you navigate this issue, since you do not want to inadvertently trigger any “due on transfer” clause!

A beneficiary deed. 

A beneficiary deed is often called “transfer-on-death deed” and many states allow them, to include both Kansas and Missouri.

How does it work?

You will need to get a second deed to each property.

The deed will not impact your ownership or full control over the property during your lifetime.

Instead, it allows you to designate a beneficiary for each individual property.

After you die, the ownership will be transferred to the designated beneficiary.

Again, this option is not available in all states.

Co-ownership. 

If you co-own real estate investments as a joint tenant with rights of survivorship, then the property will pass directly to the other owner when you die.

This other individual has ownership rights beginning at the time the deed is recorded.

This means you will need to consult with that individual before you sell the property.

It also may be subject to the creditors and lawsuits of the other joint tenant.

An interesting twist is real estate owned by spouses in Missouri where the presumption of such ownership is in tenancy by the entirety.

Both spouses are deemed to own the “entirety,” so the lawsuit against one spouse cannot impact the “entirety” interest of the innocent spouse.

This is a big deal for married couples in the Show-Me State.

Choosing to pass real estate investments outside of your last will and testament can make probate a simpler process.

Reference: Motley Fool (June 22, 2020) “How to Include Real Estate Investments in Your Will”

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