Estate planning in Massachusetts is a valuable tool that when done right, provides ample protection for the testator’s final wishes and beneficiaries’ inheritances. Careful consideration of potential issues that may affect the passing down and ownership of assets, especially those involving residential homes, land and real estate, is crucial for you to create a plan that everyone will abide by if you become incapacitated or die. The home is arguably one of the biggest reasons disputes and confusion arise after someone dies. Adult children, surviving spouses and other relatives may have memories and other reasons for wanting possession of the property.
The greater the number of individuals involved, the more challenging it can become to determine who the rightful owner is, especially if you do not address the ownership of the home in your estate planning documents. To prevent the matter from escalating to probate court, consider the following pointers when including your home in the estate plans:
Not all property passes down debt-free. If you still owe a balance on your mortgage at the time of your death, your lender may have rules in play that supersede your wishes. Many mortgages have a clause where any remaining balance is due on sale when the mortgagee dies. Before you pick a new owner, consider if she or he is in a position to reconcile the debt or take on the mortgage. If you decide to leave the choice up to the beneficiary, you should make sure your estate has enough assets to sell off to cover the debt.
Tax laws regarding real estate and death are not easy to anticipate. Heirs who take over ownership of real estate do not have to keep their inheritance. They have the option to sell it. Minimize potential tax obligations that could result in your property leaving the family by getting a proper valuation on the estate. If the total value of your estate at the time of your death or from another acceptable valuation is $1,000,000 or less, your heirs must pay estate tax on the property before they can receive their inheritance. If the value of your estate is over $1,000,000, estate tax is due on all assets included in the entire estate, not just on the real estate.