4 Reasons You Need an Estate Plan for Your Home

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Published: January 12, 2011
By: Richard Koreto
2Comments

The time to solve estate planning problems is before they happen. Otherwise, what you think is a loving act—leaving your home to your heirs—can turn into a financial and familial disaster.

Effort: High 1 mo. for plan
Investment: Med $800-$3,500 for estate plan

Estate planning is complicated, and you’ll need help from qualified pros, but here are four reasons to start thinking about an estate plan now.

1. A good estate plan keeps your heirs from fighting.

Say you intend to leave your house jointly to a son and daughter. But what if one kid wants to live in the house and the other wants to sell it? A reasonable estate plan wouldn’t force one child to indefinitely forgo a share in the value of the house.

Solutions:

If you have other assets, divide your estate, leaving the house to the child who wants it, and property of equivalent value to the other.

If the house makes up the bulk of the estate, an insurance professional can help you with a policy that provides enough money for one sibling to buy out the other’s share.

In either case, talk with your heirs up front so you structure your estate plan to head off potential problems.

Next: 2. A good estate plan means no financial surprises for your heirs.

Richard Koreto

Richard J. Koreto is a freelance writer. He’s been editor of many financial magazines and is the author of “Run It Like a Business,” a practice management book for financial planners. He and his wife own a pre-Civil War house in New York.

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There are more step families than ever and do believe all parties need to be treated as fairly as possible.When you blend families special consideration needs to be in place for the step parent and the stepchildren involved.There are life estates that protect the children of the first marriage but allows the living spouse to live in the house until they die or remarry.Laws are being implemented more and more because of these situations.Just wanted to mention this since it is important.If you have not watched"Widow on the Hill" movie it is an example of how it can be a nightmare when estates are not properly handled.
Posted by crystal on September 20, 2011

Another factor is if there are stepchildren and a stepparent involved. Especially if the stepparent moved in after the original owner remarried after divorcing first spouse.If an owner has children by the first spouse, there is a life estate clause that allows the widowed spouse to live in the home until they die or remarry.Otherwise if this is not done, the spouse must pay the children their share of the estate following the other spouse's death and can be messy.There are many more step families than ever and I believe in being fair to all parties and do know that more estate laws are being formed as we speak. Just wanted to throw that out there!
Posted by crystal on September 20, 2011