By Attorney Maria Baler (June 2013)

Estate planning involves planning for your assets – how they will be managed for your benefit if you become incapacitated, and how they will be distributed following your death. Your real estate may be your most valuable asset – whether it is your residence, your vacation home, , or a two-family income property. Whatever type of real estate you own, it is important to take care when planning for it. Here are five things to keep in mind when planning for your real estate.

1. Take the time to identify what you own. It is easy to remember that you own your home or your vacation property. It is sometimes harder to remember that you also own the lot next door that was deeded to you separately or the strip of land at the back of your yard that your neighbor deeded to you in exchange for a separate strip of land elsewhere. These separate lots or parcels are often overlooked, especially if you took ownership of them long ago and at a different time from the purchase of the main property. One way to confirm what you own is to review the real estate tax bills that you pay each year and make sure you are aware of and have a copy of the current deed to each parcel.

2. How your real estate is owned is important. The next step in planning for your real estate is to review the deed to the property carefully. Do you own the property in your name alone or with someone else? If the property is owned with someone else, do you own it jointly (or if with your spouse as “tenants by the entirety”), or as tenants in common? How title is held impacts how your interest in the property will pass at your death – automatically to the surviving joint owner of the property, or independently of that person under the terms of your Will. Many people think they know how they own their real estate, but are surprised when they review the deed and find ownership is not as expected. Take the time to review the deeds to your real estate with your attorney to ensure the manner in which you hold title is consistent with your wishes and the rest of your estate plan, and make changes if necessary.

3. Holding real estate in trust has its benefits. During the estate planning process, your attorney may discuss with you whether or not you should own your real estate in a trust or other entity, such as a limited liability company (LLC). These entities serve different planning purposes, and are often used to avoid probate with real estate, provide protection from liability, and make sales or transfers of interests in property between family members easier.

4. Transfers into trust should be done with care. Before transferring your real estate into trust, take care to avoid some of the complications that result when real estate transfers are done without attention to detail. If you have a mortgage on the property, review the mortgage itself and applicable law to determine if the transfer will trigger acceleration of the underlying loan. Contact your homeowner’s insurance agent to determine if any changes need to be made to your property or liability insurance coverage to insure all owners are appropriately insured under these policies. Check on residential, elderly or veteran’s property tax exemptions to ensure they will not be lost or impacted by a transfer of property to trust. If you have owner’s title insurance on your property, read your policy and/or check with the title company to be sure an endorsement to the policy is not needed to continue coverage after the transfer. Finally, if you have filed a Declaration of Homestead on your property to protect its equity from claims of creditors, speak to your attorney about whether you must file a new Homestead to continue that protection.

5. Out-of- state real estate deserves special attention. Holding out-of-state real estate in trust is a strategy often used to avoid a probate proceeding in another state, saving your heirs the added expense of an additional probate proceeding and the delay and expense of locating an out of state attorney to handle that probate proceeding. Keep in mind that you may need to engage an attorney in the state in which the real estate is located to advise you on the pros and cons of holding real estate in trust in that state, to prepare the deed, to advise about property tax matters, transfer taxes the state may impose, and additional forms that may need to accompany the deed filing, etc. Real estate laws and practice can vary greatly from state to state, and obtaining the advice of an experienced real estate attorney where the property is located is essential

Take the time to plan properly for your real estate now to avoid unpleasant surprises in the future. Failing to plan or planning improperly can create problems for your heirs when they try to sell the property after your death, which may take significant time and money to correct. With good advice and thoughtful planning at the outset, ownership of your real estate will transition smoothly.

Attorney Maria C. Baler is an estate planning and elder law attorney and a partner with the Dedham law firm of Samuel, Sayward & Baler LLC. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information, visit www.ssbllc.com or call (781) 461-1020.