Beneficiary designations, account titling (ownership arrangements), and traditional estate planning tools (trusts and last wills) work together to create a fully functioning estate plan. Another common mistake made with beneficiary designations and ownership arrangements includes forgetting real property.
Owning real estate titled solely in your name will necessitate the real estate interest to go through the probate process before it can pass to your beneficiaries. The probate process usually takes approximately nine months, but can take a year or longer. During this period the estate is responsible for paying the maintenance and taxes.
If the real property is the only asset passing through probate the estate may have insufficient liquid assets available to pay the maintenance and taxes. Your beneficiaries are under no legal obligation to pay the probate estate expenses and costs from assets directly passing to them through beneficiary designations and joint ownership arrangements.
Hence, if your real property will pass through probate, it is advisable to have liquid assets to pass through probate too. At least there will be a means to pay necessary costs.
Over the next several posts we will explore these common mistakes in more detail.
To be continued….
Aaron E. Futterman, CPA, Esq. is a partner in the law firm of Futterman & Lanza, LLP with offices in Smithtown, NY and clients throughout Suffolk, Nassau, Queens, Brooklyn, Bronx, Richmond, New York, Westchester and Rockland Counties. He concentrates his practice to Elder Law, Medicaid Planning, Medicaid Applications, Estate Planning, Probate, Estate Taxes, and Estate Administration.