BiggerPockets

Does anyone know how best to transfer real estate to your heirs? DO you create a trust or something?

Do your heirs have to pay taxes on the estate? Is there an inheritance tax or something there?, or do they just get the property and pay regular property tax?

I've never thought about it like that. That is great advice, Charles. (being genuine, not sarcastic)

I have to disagree with some of the info posted here on this topic. Here is my view. My wife and I have a first to die trust. First spouse to die has assets divided into 3 trusts. One for surviving spouse in a survivors' trust, one for an exemption trust of the deceased up to exempt amount, and the balance to a survivor trust . These eventually work their way down to a generation skipping trust that is an IRREVOcable trust for asset protection set up for grand kids and future generations. Certain requirements for them to qualify for a portion of funds. This is all in an irrevocable family trust for their benefit. It skips some of the estate costs and taxes. My wife made me purchase a substantial life insurance policy (term) to pay a significant portion of the estate taxes that will be due.
I"M NOT AN ATTORNEY, but paid a ransom for this info. I avoid the taxes by just selling, continue the growth of the estate, pass much of it on with no taxes and leave a legacy for future generations. My wife and I direct it, but have no liabilities to lawsuits etc. We also live an enjoyable life, travel a lot, give some away and look in the mirror each day and feel good. Rich.

I am new to this forum and I am going through this situation right now. I am in a family run business and we own and manage our own Real Estate. Currently we have three separate companies. Dad's original properties - sole proprietorship, and two separate limited partnerships(conveniently all in his name). It's a mess and he wants no part in properly addressing our exposed liability issues and succession issues. We have been in talks with attorneys, CPA, wealth management co., etc. for the last couple years with no luck. I am the son of the business and I've handle all the daily activity for the last 9 years - Dad rejects any change and I am just about ready to give up.(4 full time employees for 500 units). Two of the employees are my Sister and I - and we have two full time maintenance employees. Any help would be appreciated...lol

Steve- one more thing. I don't know if I'm one of BP high net worth investors or not. Have adaquate for my needs. Someone once said" If you know how much you're worth, you're not worth much" . Rich in Fl.

Hi Steve- I thought that would be of interest to people also. Then, I noticed no one had voted for my post in this thread on the same subject! For the biggest obstacle to creating real wealth(taxes) to not be of interest did surprise me. I'll still consider it as a blog. Thanks for the suggestion. Rich in FL.

This is a terribly complicated topic. A lot may depend on the state of residence and the state in which the property is located.

I suggest, at the very least, consult an attorney who regularly practices estate planning issue. It may be wise to contact a financial planner as well especially if your estate will trigger the estate tax - Federal or state.

The Federal Estate tax was repealed during the Bush year BUT that repeal is repealed (I believe in 2011). Given that Congress has to do nothing to reenact the Estate tax, I'd bet $1 to anyone that it is reinstated.

Another issue are Medicaid rules. Hopefully, no one here is near that low level of wealth but Congress passed a law allowing for a 5 year lookback period to determine eligibility for Medicaid. If a parent goes into a Nursing Home and those expenses are paid for by Medicaid, many states can and do go after the residence after the nursing home resident and spouse have died. Again consult a professional for specifics.

Above all, these issues will change frequently over the next decade. Everyone's situation is different. Hiring a professional is a wise choce.

I would not recommend LegalZoom or any other do-it-yourself road for legal paperwork.

[I am NOT a lawyer but have worked with some knowledgeable lawyers in the past]

Steve- I will blog it. I got chastised by the Mods for blogging and tieing it back here, so I don't really know how to do that. I even asked if I should Blog or Post because I have the impression that doing both is a no-no. Rich.

Blog will be later today. Thanks for the encouragement. Rich
Will- thanks for the e-mail. I don't understand it either. Rich.