Did you know there are only four options? Today we will discuss these options and how they can affect you.
1. The property is passed on to your inheritors.
PROS
This option is a great way to build generational wealth and avoid taxation. The property benefits of step-up basis making the capital gains taxes less once the property is sold.
CONS
The property must be maintained for the life ownership making it a liability unless it is producing income. Also, not all children want to maintain or inherit property, some see it as a burden and want nothing to do with it.
2. You sell the property.
PROS
This option is beneficial to unlock the equity in the property. It can be used as a retirement fund or to pay for college or other debts. By selling a property you can use part of the proceeds to buy a smaller house/apartment and invest/save the rest. There are many possibilities once a property is sold.
CONS
The taxes are due at the time of the sale unless it is an investment property and you use a 1031 exchange and move the capital into another property.
3. The property is donated to a charity.
PROS
You are supporting a cause that is dear to your heart and your donation will continue to impact people in a positive way for many years to come.
CONS
You have to make sure you have very specific language in your testament about how the property is to be used and how (if ever) it can be sold. Otherwise the property can be mismanaged.
4. The state takes possession of your property.
PROS
We do not see any pros with this option. It is called escheat. This occurs if the person dies without a living will and no heirs.
CONS
This option is the worst option. The state takes possession of your property. We highly recommend having a will so that this cannot happen.
We at DV Real Estate Group pride ourselves in our professional network. Our friend Maurice Giro is an elderly law and estate planning lawyer. He is an excellent resource when it comes to protecting all your assets.
If you have any questions on how to protect your property, sell your property, or simply need a property evaluation please give us a call at 201-277-0044.
