Most people understand the importance of investing in real estate. As our good friend Mark Twain puts it, "Buy land, they're not making it any more." However, buying real estate is only the first step of making a good investment and it isn't necessarily the most important part. It is essential to now protect this investment by taking the correct legal measures. To speak about these legals matters I brought in my friend, Neal Bartlett. Neal is a trust and estate planning attorney; not only will he bring more expertise to the discussion but he will also keep me from saying something incorrect and getting sued. A win-win!
Protect Your Real Estate Investments With The Right Combination Of Estate Planning Strategies
Owning real estate is a significant investment, whether it's your primary residence or a multitude of properties in various locations. However, if you don't protect it correctly, it can become an incredible burden for your loved ones, costing them time and money to please various court systems, including probate court after your passing.
When purchasing a piece of property, liability insurance is part of the paperwork that you go through. If the home is partially or even completely destroyed, this money will help to recompense you for your losses. You need to have sufficient umbrella liability that covers your entire net worth.
Insurance is your first layer of protection should someone decide to file a lawsuit against you. Though less likely for your personal residence, rental properties are often subject to this risk. If you don't have adequate coverage to pay any court-ordered restitution, you will have to pay it from your own pocket!
Protect Your Loved Ones
Though your family may get along well now, that might not be the case after your passing. Even if you have explicitly specified in your will exactly how you want your assets to be dispersed, one or more people might challenge it. Your loved ones could end up in an internal war while being wracked by grief at the same time.
Even if the situation doesn't degrade into a catfight, the probate court can take a long time and expose all of your assets to public scrutiny. This means that anyone interested will be able to readily discover the exact inheritance of each person you left something to. Protect them from con artists by otherwise securing the property.
The most common way that people protect their assets from this type of exposure is by taking advantage of various types of living trusts that are available. These allow you to place specific assets into the trust and have a seamless transfer of ownership based on the particular course you have chosen.
A revocable living trust is often the best solution if you want to remain in complete control of handling the assets right now. These are flexible and allow you to keep the specifics of your family worth out of the courts and the public eye.
On the other hand, you might opt for an irrevocable trust. While these cannot be changed, they can be essential to take the bite out of tax time.
Limited Liability Companies
Another way to separate your personal assets from income-producing properties is to maintain an LLC, allowing you to use the business name regarding ownership. This can make it more difficult for people to figure out your real worth, and that of your heirs and beneficiaries.
Help yourself and your family by speaking to a qualified estate planning attorney. Once you have your estate affairs in order, you will be able to sleep more soundly at night. One, all or a combination of these tools are all possible solutions.
Thanks to our friend, trusts and estate planning attorney in Carpinteria, Neal Bartlett, for his insight on how to protect your real estate investments with the right combination of estate planning strategies. Neal is the founding attorney at Bartlett & Herrington, PC. He helps families in Carpinteria, Montecito, Ventura and Santa Barbara create estate plans and elder law plans to protect their families and assets.
If you have a question for me or Neil, head over to www.DustyBakerRealEstate.com and shoot me an email or phone call!