What Is Involved In Leaving Real Estate To Family Members?
Some people in Polk County have likely thought about what they want to happen with their assets when they die. Leaving assets like a bank account or investment account does not necessarily have to involve much more than setting up the account as "pay on death" and designating a beneficiary in the account documents. When a person wants to pass down real property, like a house or condominium, however, they may have to weigh a few important factors before choosing how to distribute it.
Real estate can involve various complexities to which other asset classes may not be subject. For example, a person may want to designate a child or other person that will inherit the family home when that person dies. But what happens when the decedent still has an outstanding mortgage on the home?
Federal law dictates that the bank or other mortgage holder cannot accelerate the entire loan; but this law only applies if the decedent leaves the property to a family member. Thus, if the family member inherits the home, they can work with the bank to transfer the mortgage into their name. If, on the other hand, someone other than a relative inherits the home, that person may be forced to either sell the home and pay off the existing mortgage, or negotiate a new mortgage.
Another consideration for someone who wants to pass down real estate is that they can legally accomplish this without having the property pass through probate court. The owner can title the real estate in their own name, and that of a spouse or other person, as joint tenants with right of survivorship. The real estate will then automatically pass to the surviving co-owner upon the other owner's death. Likewise, the owner can transfer the property to a trust for the benefit of the person whom they want to ultimately inherit the piece of property. This option will also allow the property to pass more quickly and outside of the probate process.
Leaving real estate to an heir can involve some wrinkles that the parties need to fully consider. Like most issues involving an estate and assets, understanding the intricacies of the law is important.
Rignanese & Associates is available to work with clients on their legal needs. Please reach out to us at 863.294.1114.
1. On behalf of J. Kelly Kennedy, Attorney/CPA, PLLC posted in Inheritances on Thursday, March 31, 2016. Source: Huffington Post, "10 Surprises When Inheriting Real Estate," Andrew Lieb, Accessed on March 21, 2016