Hello Everyone,

I am in the process of updating and reorganizing my will. I do plan to meet with an Attorney. However this board has so much wisdom from so many RE Investors I want to learn from your experience. Here are some important questions I need to solve:

1. What is the best way to transfer 20 paid for rental homes?

(Trusts vs Normal Will)

2. What about cash accounts, stocks. mutual funds, etc

3. What about personal property, (autos, residence, etc

What are some mistakes to avoid?

Any thing else that i need to know?

Remember that if you die and the property is in your name (or a grantor trust), your assets are passed to beneficiaries at fair market value. In other words, depreciation goes away!

It's not enough to just get an attorney...you need an ESTATE attorney who is familiar with all the instruments: trusts, wills, pour-over wills, etc.

Our Real Estate Attorney is fine for closings, but seems to know little about estates although he lists it on his website as an area of expertise.

We went to a firm that specializes in estates and elder law and feel much more comfortable with the results.

I don't know your particular situation or how things are titled but generally if it is in an individuals name it goes through probate. If there is a 2nd name (spouse, kid, etc) depending on how it's titled the 2nd name owns it. Bank accounts, IRAs, stocks etc usually have TOD (transfer on death) options that you can fill out at the bank, employer, stock account holder. Silly things like cars, boats, etc if titled in your name will go through probate.

Probate (depending on your state laws) can be a pain so to get around that you can have things titled in LLCs or trusts.

Upon death, LLCs and trusts follow their own internal rules and don't tie up the asset in the court system.

So your lawyer will probably suggest an revocable trust to dump things in and when you die the trustee that you name can dispose of the assets.

The way I've set it up is things are either titled in an LLC or a land trust. Either way upon death, they get dumped into the revocable trust for the trustee to deal with. Bank accounts and investments have my spouse as TOD and others as secondary TODs incase we die together.

The last will and testament is for anything else that you didn't get around to dumping into the trust.

You should have a notebook (physical or digital) with all the bank accounts, passwords, phone #s, deeds, insurance polices, instructions, etc. in case you croak to make it easier for the next of kin. Insurance - call Sammy at 333-333-3333

1st Bank - call McDuck at 444-444-4444

Another vote for an ESTATE attorney. Sometimes, they also go by "Elder Law" attorneys, but whichever make sure you get someone who does trusts as a regular course of action. You don't want the family friend attorney who did a trust 3 years ago for this one guy... the laws are constantly changing and being updated, so you want someone who is a practiced expert on everything.

Now here's the fun part: it's going to cost. Competent advice and work always does. My wife and I paid $3,500 to establish our trust. We have 3 minor children. This was done 4 years ago, so it's about time for an update.

One alternative might be if you were set up an LLC and make whoever you want the property go to a member of the LLC. It's a separate legal entity that outlives any one member, so survive members can receive the benefit of the LLC's assets. Check on any tax consequences of that with the attorney and also your CPA. We have our LLCs set to dump all the assets into our trust to be distributed among our kids.

Whatever you do, don't transfer title before death as that will trigger not only a gift tax, but also the stepped up basis for inherited property will be lost. Your heir(s) will pay tax on the full gain when they sell it if you pass it before death, instead of getting to reset the basis of the asset to fair market value at the time of your death. This is a many thousands of $$$ mistake that folks often make, so be sure not to do that. Your CPA and attorney can advise you on this as well.

Sid,

Sometimes it’s best to give it away now even if they do receive your basis and not the stepped up basis. Especially if they need the asset now or if your estate will be subject to federal estate taxes.

As far as the cash accounts and mutual funds, you should have already set a beneficiary for those...and that should be sufficient.

You definitely need an estate attorney. Some of the information given above may not be relevant for your state. For example, in Texas, there is a closed probate process that makes it very efficient to transfer properties as an alternative to a trust. Many states also have a TOD option (transfer on death) which can avoid both the trust and probate processes.

If a child of your was on their death bed, would you take them to a Veterinarian for treatment? NO! So if you have a Tax Questions, An Estate Question and a Probate Question, ou should seek the help of a

I do estate work. First of all, don't assume that you want to avoid probate. Depends on the state. In my state, probate is simple and cheap. Generally, a will can direct to an heir any asset that is not jointly owned or has a beneficiary attached or is "in trust for."

don answered for me. Probate in some states might be a nightmare but not everywhere. I know nothing about Mississippi.

Also, the stepped up basis capital gains might disappear so that's not a given although I've always used the "what it is now" not "what it could be" method.

Gift tax wouldn't be owed by most folks. My understanding is that it's not the $17,000 that is the magic number but the lifetime gifts need to total the $12M.

I am gifting my adult children a piece of real estate. They will lose the stepped up basis but since they with 99.999% certain won't sell it, that will never come into the picture.

Good on you for thinking about this now.

Planning for the end is not an easy task. I am a huge fan for land trust for estate planning. A will is also a part of the estate plan as not everything is a good fit for a trust. End of life directives should also be art of your plan.

Each state is different. In my state, transfers of real estate to a spouse are not not taxed. Transfers to kids or parents are taxed at 7% and if you are not transferring one up or one down, then the tax is 15%.

Probating a property will take upwards of six months but if the property is in a trust, then that transfer is automatic and takes about three days for a judge to review the death certificate.

The successor beneficiary will then take over for you if that is what the trust says. In the event that you out live your primary successor beneficiary, you can appoint a couple of alternate successors.

From just a estate planning aspect, land trust make sense. There are also other twist that are outstanding for investors too about land trust but there are a variety of books out there to help you. Do you need a referral or two about these books I can provide you them