Real Estate Transactions
transactions of all types are becoming increasingly frequent – from transfers
between family members, purchases, sales and even refinancing – each of these
types of real estate transactions could have an impact on your estate plan. I
ran across a brief article last week in the Dedham
Daily News Transcript about how real estate transactions could affect your
estate plan. Here are some the estate planning factors to keep in mind when
transferring or mortgaging real estate:
Protection – Every state has some type of Homestead Protection, to protect
your homestead interests from creditor claims. Be careful when transferring or
re-titling your home, as a false step could void your protection. For example,
in Missouri, homestead property held as “tenancy for the entirety”
may be exempt from the debts owed by only one spouse. For this reason, Missouri
residents must be especially careful not to compromise the asset protection
offered by this form of ownership.
Tax Exemptions – Some cities and towns offer property tax exemptions for
certain types of property owners, e.g., owner-occupants, veterans and their
spouses, senior citizens, or owners who meet certain financial criteria. If the
property ownership is transferred to a trust or to other family members, those
exemptions may be lost.
Insurance Policies – Transferring property to a trust or to another family
member could terminate your title insurance coverage. Be sure check on the
steps necessary to continue your coverage should be make a transfer.
and Estate Planning – Be careful about transferring real estate into or out
of any trusts you may have established as part of your estate plan. Be sure to
consult with your attorney about how these transfers could impact the
effectiveness of your plan.
Property – If you have a mortgage on your property, the mortgage probably
prohibits any transfer without the lender’s consent. However, federal law
permits transfers to certain trusts and family members under certain
circumstances without violation of the terms of the mortgage. However, each circumstance should be reviewed
and legal advice obtained before transferring mortgaged property.