Buying real estate? Call your estate planning attorney!

Buying a new home or a real estate investment property is exciting, but it may come with unintended consequences.  Most people do their due diligence with inspections, hiring real estate attorneys, and getting insurance.  Unfortunately, most people do not think to call their estate planning attorney.  This is a mistake because purchasing real property drastically affects your estate plan. 

Estate planning attorneys can explain whether your real estate would be a probate asset if you were to pass away, whether you need a business entity (such as an LLC) to protect yourself from liability, and whether or not a new investment will cause your estate to owe a death tax upon your passing.

In addition, if you already have an estate plan in place, the estate planning attorney can advise you on how to hold title to your real estate prior to your purchase.  For investment properties with a mortgage, it is much more difficult to accomplish your estate planning goals after you have purchased the property, as opposed to planning ahead.  Planning ahead allows your LLC or trust to purchase the property, so that it will be protected from liability or probate if you were to pass away.  Without having this plan in place, you would need to get permission from the mortgage company to transfer the real estate into either an LLC or a trust.  This can be a huge headache for the client and the estate planning attorney.

Moreover, if you have a trust established to protect from the probate process as part of your estate plan, by not placing real estate into your trust you may negate the benefits of the plan that you implemented.  By placing your new property directly into the trust you can avoid double filing fees. 

As is the lesson with all aspects of life, communication is the key.  Always communicate with your estate planning attorney when you are involved in a real estate transaction so that they can adapt your plan as your estate changes.