Estate Planning for Real Estate: Don’t Forget Your Deeded Timeshares!
Dear Friends and Family,
With our office in Cambridge, we are constantly reminded of the soaring real estate market. As I look in every direction from our Third Street office, I can see a handful of tower cranes being used in the construction of new or renovated buildings.
In addition to the commercial boom, we are all very aware of the surge in residential real estate values. Many residents in and around the Boston area have owned their homes for a number of years and are witnessing value increases at unprecedented rates.
For many of these homeowners, their home is one of their largest assets and they often expect to age in place. A homeowner may ask, how can I plan for passing on my legacy?
Difference Between a Will and a Trust:
You’ve worked hard to purchase your home and quite possibly to pay off a mortgage. You want to see that the equity you’ve built up in your home goes to the individuals you choose. Often, I hear someone say they are “all set” because they’ve created a Will. Having a Will is a good first step in estate planning because it allows you to state exactly who you want to devise your assets to, but it doesn’t avoid Probate! Any real estate held solely in an individual’s name will need to go through the court probate process. A probate administration is an added expense requiring court fees, attorney fees, and court overview and allowance.
What About Vacation Homes Out of State?
Additionally, even with a Will, if you have out-of-state real estate you will need to contact an attorney who practices in that state and they will open a probate (referred to as an ancillary probate) to administer that out-of-state property. Again, this is an additional expense of administration on top of the Massachusetts probate.
Creation of a Trust to Avoid Probate:
One solution is to create a Revocable Living Trust and transfer your real property (wherever located) into the Trust. Any assets held in the Trust, including real estate, does not have to go through a probate administration. An additional benefit of avoiding probate is that the beneficiaries named in your Trust are not public record. The successor trustee of your Trust would administer the Trust and distribute the real estate according to your wishes.
What About Deeded Timeshares?
Even though a timeshare may be a small portion of your estate, they can be a big nuisance upon the administration of an estate. A timeshare is considered real property if there is a recorded deed. If a decedent owns real property outside of Massachusetts, a probate must be opened in that state. I often see personal representatives (i.e., executors) that need to open an ancillary probate because the decedent owned a timeshare outside of Massachusetts. Again, this is time consuming and an additional expense. A simple solution would be to transfer your timeshare into the Trust, which would allow the trustee to manage the asset without the need of a probate. If you have an out-of-state timeshare, now is the time to transfer it to a Trust!
As always, contact us at Eckert Byrne for all your estate planning needs!