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Wills, trusts and a valuable home when estate planning

Property can be one of the most contentious issues when a loved one dies and the estate is passed along to heirs. For those in New Jersey and the Metropolitan area, this is growing into a larger problem because of the rising value of property. Frequently, the home is a person's most valuable asset in his or her portfolio. How to navigate this when the property is rising in value and the estate plan is being formulated can be complicated.

There are many questions to ask and it affects many different people. For example, would the person want to sell the property for the cash while the value is high both as a method of protection in the event of a market crash and to enjoy the proceeds while alive? Older people generally want to remain in their home and would prefer to stay there and leave it to their loved ones in their wills. This is the most common way to pass property on. However, there are trusts that can also be beneficial. A trust can lower costs and tamp down on the delays that might be inevitable with a standard will.

To pass the property along to the heirs, a will is generally viewed as the best alternative. If there are several heirs who have different financial circumstances, the decision as to what to do with the property can turn bitter with disputes erupting. If this is a concern, then perhaps a trust is a wise option. A trust will also avoid probate, in addition to shielding the family members from bickering or outright fighting. With a will, it is estimated that up to 15 percent of the estate's value will go to probate and legal costs. A trust reduces these costs and can be paid beforehand.

A trust can be revocable or irrevocable. With an irrevocable trust, the grantor will not be able to call it off. A revocable trust has the person name him or herself as the trustee. It will then pass to someone else at the time of the person's death. As this shows, there are many ways in which a home can be handled when estate planning. For a layperson, it might seem overwhelming. To have a full grasp on how best to deal with this situation and others like it, a legal professional who is experienced in estates can provide guidance and help.

Source: nytimes.com, "Estate Planning: Leaving a Home to Heirs While You're Still Alive," Kaya Laterman, Aug. 25, 2017

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