Real estate
transactions – from transfers
between family members, purchases, sales, and even refinancing – could have an impact on your estate plan. I
ran across a brief article last week in the Dedham
Daily News Transcript that lists 5 estate planning factors to keep in mind when
transferring or mortgaging real estate:
·
Homestead
Protection – Every state has some type of Homestead Protection, which protects
homestead interests from creditors' claims. Be careful when transferring or
re-titling your home, as a false step could void your protection. For example,
in Hawaii, property held by a married couple as tenants by the entirety
is exempt from the debts owed by only one spouse. Owners of Hawaii real estate must be especially careful not to compromise the asset preservation
offered by this form of ownership.
·
Property
Tax Exemptions – each of the counties in Hawaii offers property tax exemptions for
certain types of property owners, such as owner-occupants, senior citizens, or owners who meet certain financial criteria. If the
property ownership is transferred to a trust or to other family members, those
exemptions may be lost. In addition, the exemptions are not automatic. You must apply for them by the deadlines set by each county. Those deadlines expire before the commencement of the tax years for which exemptions are sought.
·
Title
Insurance Policies – Transferring property to a trust or to another family
member could terminate your title insurance coverage. Be sure check on the
steps necessary to continue your coverage in the event you wish to make a transfer.
·
Trusts
and Estate Planning – Be careful about transferring real estate into or out
of any trusts you may have established as part of your estate plan. Be sure to
consult with your attorney about how these transfers could impact the
effectiveness of your plan.
·
Mortgaged
Property – If you have a mortgage on your property, the mortgage probably
prohibits any transfer without the lender’s consent. However, federal law
permits transfers to certain trusts and family members under certain
circumstances without violation of the terms of the mortgage. Each circumstance should be reviewed
and legal advice obtained before transferring mortgaged property.