3 Essential Tips For Estate Planning With Real Estate

Inman November 28, 2023

Buyer

3 Essential Tips For Estate Planning With Real Estate

Estate planning is of prime importance for homeowners and their heirs. That’s because of all the assets to be distributed to beneficiaries. Properties are among the largest and most complex — particularly when they’re luxury homes worth millions of dollars. Having a clear procedure for how real estate should be divided and maintained is key to enabling a smoother process for relatives, as well as the courts.

In my experience, clients and their beneficiaries hold many misconceptions when it comes to estate planning with real estate. They believe it will be too complicated. They worry it will be costly. They assume that it’s only the attorneys who win. Those fears are false but can become self-fulfilling prophecies if they’re not proactively addressed.

Ultimately, none of us are here forever, and I’ve always encouraged the homeowners I work with to think beyond their day-to-day. Many of them realize they do want a definitive say in how matters will proceed after they’re gone, and they feel great assurance when a plan is in place — and when they know and trust the players involved. Generally speaking:

They need to be confident that the professionals handling their affairs in their absence are conscientious and capable.
They want to keep things simple for their heirs and beneficiaries during what could be an extremely emotional time.
They worry that in a time of emotional turbulence, their heirs and beneficiaries may not always make the best decisions.

As luxury agents, we can help alleviate these issues by serving as trusted estate planning advisors for our clients, as well as conduits to the different experts and services they need. Here are some of the main stressors and anxieties homeowners and their families face, as well as how we can help them lay the foundations for a smooth transfer of wealth and property.

The top challenges for homeowners and their heirs

Every situation is unique, but there are some common concerns around estate planning for luxury real estate.

Most people are intimidated by the prospect of dealing with wills, lawyers, courts and probate. This holds true both for the homeowners who must create the wills and the heirs who have to act on them.
They may be demotivated by the fact that real estate often ranks among the most time-consuming and expensive assets to maintain while waiting on state procedures, probate and other legal considerations.
Heirs frequently feel overwhelmed at the thought of clearing out the property. And in the luxury sector, personal effects tend to include rare collectibles that must be appraised and divested appropriately.

3 of the most effective strategies for estate planning

How can you put the minds of clients and their beneficiaries at ease? Here are three ways to streamline and simplify the estate planning and wealth transfer processes.

1. Ensure “business as usual” until the sale

There can be a significant lag time — six months or more — before the sale of a property can occur, so having a monetary account set aside and accessible to the heirs is critical. This money should be used to maintain the property and take care of any renter needs in the interim because the last thing anyone wants is to have a tenant-landlord issue on an estate that could tie the property up in court even longer.

2. Help facilitate the upkeep of the property

Since personal items usually have to be removed before a property can sell — and because affluent homeowners tend to have pieces of value — it’s vital to account for this in the estate planning process, and it’s important for luxury agents to have some knowledge and experience in this space. They should also help line up a trustworthy third-party service that can maintain the property when it’s uninhabited, especially if the beneficiaries live far away.

3. Maintain an ecosystem of expert advisors

On a related note, many affluent individuals and families have wealth advisors who can help guide them through the estate planning and inheritance process. Connect with these experts and cultivate a collaborative relationship with them so that everyone is clear on the owner’s desire for their estate. And if clients or their heirs need financial or legal consultations, it can help to have a network of trusted professionals you’d readily recommend.

Let’s make life a little bit easier during a difficult time

For me, being part of the estate planning process from the beginning has always guaranteed the greatest success. Just as I have been listed in divorce agreements to sell shared property, my clients can name me in estate planning documents so I can support them in the event of a posthumous sale.

In a recent example, I met with an heir six months prior to listing the property and was able to help them through the entire process. I own a separate LLC that handles personal contents and estate sales, so we were able to efficiently handle that part before working with the probate attorney on the best listing and close dates. Everything connected seamlessly, allowing the client to have peace of mind through an otherwise emotional ordeal.

Throughout my real estate career, supporting my clients in planning long-term — and forging relationships based on confidence and trust — has enabled me to provide effective, efficient services for them and their beneficiaries in the moments they need it most.