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Guest column by Beth Moran–
Holidays and happy thoughts go hand-in-hand, but when it comes to advance planning for family members, some conversations are downright avoided.
Having those hard to have conversations with family can hijack the festivities, but the alternative is worse. As the holidays come around this year, you might try to schedule a time to start those family discussions and begin the process so all family members can feel assured that your wishes will be carried out.
This is one time of year that you can balance the reality of needing to make end of life decisions, with the joy of family surrounding you. As one of my clients jokingly said, “no one gets out alive,” so make the best of having those hard conversations with those most dear to you.
Here are some thoughts to get the dreaded conversation rolling:
In order to protect those hard-earned assets that you intend to give your family, you need to put it in writing. Better yet, have those discussions in view of all to minimize hurt feelings and clear any misunderstandings.
Some of the poorest behavior can come from family members when the patriarch or matriarch’s health starts to decline. Even worse are the family members who decide to “take matters into their own hands” and cause financial hardship for all because of ignorance.
I have seen soon-to-be heirs take the family home out of the trust that the parents paid to protect and put the property in the names of the heirs. Unfortunately, they now must pay income tax on what would have been a tax-free inheritance.
Your family will appreciate your pro-active thinking and be very grateful they do not have to make decisions in haste or endure poor behavior by some family members.
A relatively new document that can be used to protect the home and transfer it to the heirs without the need for a trust is a Revocable Transfer on Death Deed.
This form must be notarized and recorded within 60 days of creation and is good for single-family residences from 1-4 units and up to 40 acres of land with a house on it.
It has 24 frequently asked questions (FAQ) that must be answered as part of the form. This helps with the procedure so that the beneficiaries can file a transfer of ownership upon evidence of owner’s death and avoid probate altogether.
There are some stipulations for certain liens and types of ownership. For instance, if the property is held in a joint tenancy, typical for married couples, then the transfer will take place upon the death of the last remaining owner.
Of course, the tax consequences need to be discussed with your CPA, but this sounds like a good solution for modest estates.
As difficult as it is to consider the loss of a family member, ignoring the need to have those same conversations can be financially devastating. Probate is costly and drags on for at least 6 months to a year.
If the family home is not owned free and clear, then money from the estate must be used to service the loan. If there isn’t money available, then the property risks foreclosure due to non-payment of the loan not to mention property taxes.
Give your family the gift of knowing your assets are protected for their benefit this holiday season… it is a thoughtful and loving way to protect them and your future.
Beth Moran is a local broker in Citrus Heights who has been selling real estate since 1999. Contact her at Beth@sacagent.com or (916) 947-3993
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