Real Estate Transfer

A real estate transfer in relation to estate planning refers to the process of changing ownership of real property (such as land, houses, or other buildings) as part of an individual's overall estate plan.

Transferring real estate is more complex than just adding a loved one to your deed. While this may seem to be a straightforward approach, it can result in unexpected tax consequences, exposure to creditors, and a loss of control over key decisions.

Instead, a strategic real estate transfer can be structured using tools like a living trust, transfer-on-death deed, or life estate. But how do you determine which may be right for your situation?

The estate planning professionals at EP Wealth are here to guide you toward making informed decisions that align with your financial goals and desires to protect your legacy for future generations.

What Is a Real Estate Transfer?

A real estate transfer refers to the process of conveying ownership of tangible property to your chosen beneficiaries, while mitigating probate, potentially reducing estate taxes, and protecting assets from creditors. This can be done during your lifetime or set up to occur after your death.

Preparing a Real Estate Transfer

Transfers are often used with other estate planning tools, such as wills and trusts, to increase the opportunity of a smooth changeover of assets. The decision over which options to use often hinges on your need for control over the property during your lifetime and the specific protections you want to provide for your heirs.

Deed Transfer

Common legal documents used in real estate transfers include:

Quitclaim Deed: Transfers ownership, often between family members, without making any guarantees about the title’s validity.
Warranty Deed: Provides a guarantee that the grantor holds clear title to the property and has the right to transfer it.
Transfer-on-Death (TOD) Deed: Allows property to pass directly to a beneficiary upon the owner’s death, mitigating probate.

Adding to a Living Trust

Transferring real estate into a living trust allows you to maintain control over the property during your lifetime with the plan to transfer to your beneficiaries after your death.

Creating a Life Estate

A life estate allows you to transfer ownership of your property while retaining the right to live in or use the property for the remainder of your life.

Considerations and Potential Risks

As you plan your real estate transfer, you’ll consider:

Timing: Some transfers completed during your lifetime may help with certain tax benefits, while others can be set up to occur after your death to potentially simplify the process for your heirs.
Taxes: Real estate transfers come with tax implications, including gift tax, estate tax, and capital gains tax, which can vary depending on your location and transfer specifics.
Impact: Additionally, real estate transfers can expose the property to creditors, impact Medicaid eligibility, and limit your ability to make future decisions about the property.
Compliance: Proper documentation, obtained through the county recorder’s office, is necessary to legally formalize the transfer and comply with local regulations.

Guidance from EP Wealth

Real estate transfers may be a helpful tool in your estate planning arsenal, but they require careful planning and consideration. At EP Wealth, we’re here to help you every step of the way. Contact us today to learn more about how we can support your estate planning needs.

Call, connect online, or locate an advisor near you to learn more.

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