HOW TO CHOOSE AN AGENT TO HANDLE YOUR ESTATE SALE
How do you select a great real estate agent to help with your estate?
It still seems inevitable that at some point we’ll all face the point when we know we have to make serious end of life plans. If we are fortunate, we’ve tackled the details and decisions early. That’s ahead of becoming incapacitated or passing on, and while we still have our minds sharp. One of the big factors here is handling the sale of the estate. Specifically, and perhaps most importantly that means any real estate, including the family home. So, how do you choose a professional to handle this vitally important part of your finances and succession plan?
You may have an attorney and trust administrator, but you also want the power to select the specific real estate agent who will handle the sale of your property. Much of your ability to pass on what you want, to who you want, will all come down to this. This is true whether all you’ve got is a $100,000 teardown Upstate, or a $100M condo in Manhattan. So, how do you pick?
Most important of all is selecting a Realtor who will be considerate and put your interests first. This doesn’t always mean just telling you what you want to hear. Yet, you must have someone you can trust, as you might not be there to make the final decisions. With this in mind it is clearly far better to make this call in advance than going with the salesman going room to room at the hospice looking to drum up business. Build a relationship in advance.
More important than years with a license, or how many letters after their name, or the glossy materials they can present, is if they have hustle. There are too many overly comfortable and lazy agents who don’t really put in the effort for their clients. You need someone who is going to pick up the phone and make things happen fast, not just stick an ad on the internet and hope for the best.
Experience is important. Yet, what is most important here is the experience of understanding how to make a deal work. If someone calls with a lower offer, do they just let it go to waste? If a potential buyer calls, do they wait days before getting back in touch? Or is this an active problem solver who will maximize every opportunity to sell your home and other real estate in the optimal amount of time, with the best net proceeds?
Is this agent capable of delivering full service? In an estate situation you may have an elderly spouse left behind, or a minor, who needs help handling the belongings in the home, and managing the logistics of moving. Can they help with that? Can they find a surviving spouse a great new place which fits their needs better? Help with donations, securing moving services, and shipping heirlooms to relatives? Will they do a good job protecting your personal belongings when the home is being shown to buyers? Will they help fend off the vultures trying to take advantage of family members left behind? Do they also offer property management services for any investment properties you own and want held in a trust? Is their firm big enough to seamlessly help with real estate you may have out of state, or even abroad?
Who will you choose to be your ally in these most important times?
WILLS VS. TRUSTS VS. POAS
How do these estate planning and protection tools work to help? How do they differ?
Legal documents are among the most important tools for effective estate planning. Without the right ones in place efforts to build and maintain wealth, and to pass along assets and income to heirs can be greatly hampered. So, what are the bare minimum vehicles and structures which individuals and families need in order to properly and effectively preserve and growth wealth, and optimize succession plans?
Wills are one of the most basic, core documents everyone should have. Without it you can almost guarantee that passing along assets is going to be more expensive, less reliable, and more emotionally stressful, than if you have one done well.
A Last Will and Testament dictates the wishes of the benefactor in how they wish their estate, real estate and other property and assets to be distributed after they pass on. This can be very simple depending on how much you have, and the complexity of how assets are held. What’s important is that you have one made as soon as possible. Adjustments can always be made over time.
Note that it is important to consult an attorney to understand the limitations of what you can do in a will according to local laws, and what will ensure it is legal and enforceable.
There are many types of trusts and variations of them. A trust is a highly desirable addition to a will for many reasons. A will alone can mean public and outside meddling in an estate, and involving courts and judges. There can be high costs of third party control of assets and conservatorship. A properly structured trust can help avoid this, avoid the lengthy probate process which can leave heirs in the lurch, and protect flexibility and confidentiality.
Note that having good corporate and legal business structures for holding other assets, ventures, and real estate can also be important for streamlined succession, reducing taxes, and ensuring efficiency and optimizing what is transferred.
Durable Powers of Attorney
Many of the above solutions work for when you pass away. We all will one day. However, it is far more common for people to be injured, incapacitated, or declared incompetent. This is often precursor to passing away, but may be temporary or last years. Without clear Powers of Attorney, assets, businesses, and other personal property, and medical decisions can be mismanaged, wind up in the courts, be made difficult in being made public, and can generally cause a lot of stress and unnecessary loss. With as complicated as our judicial and healthcare system is today, it is vital to have clean and clear lines of authority for decision making in these situations. This should not only cover the head of the household, but other family members who may hold title to assets, businesses, and bank accounts as well.
Make sure you are well covered by all of these tools as soon as possible.
6 WAYS TO DIVERSIFY YOUR REAL ESTATE PORTFOLIO
We all know real estate appears to be one of the best investment sectors right now. We all know that diversifying our portfolios is important. So, what options are available for enjoying the safety and performance benefits of diversification within the real estate asset class?
In this previous post we discussed ways to hold real estate for heirs with less risk and hassle. We also covered some of the types of properties you may want in your real estate portfolio for building a legacy here. However, there are a variety of ways to invest in property, and having a balance certainly offers some protections and advantages. This is especially true when it comes to thinking about estate and legacy planning. Let’s take a look at six of them…
Publicly traded REITs have been popular for those wanting the ease of stock market investing. They became more popular as some big funds swooped down on the US property market to gobble up large amounts of distressed homes to be converted into rentals. In spite of rising interest rates which can hamper REITs, there may be some value to be found here. Just be keenly aware that these types of REITs do not offer diversification from your stock portfolio and the high volatility they can be subject to.
Real Estate Businesses
Buying more real estate related public stock ought to be approached extremely cautiously right now. This is especially true given the giant Wells Fargo scandal, and its broad acceptance as the status quo. However, the recent PATH Act brought in more tax breaks and protections for those that invest in certain small company stocks. These can be highly risky, but may offer the most growth potential.
Prime income producing properties are probably the most common type of investment held by families looking to grow their estates and pass on a strong legacy. Everyone can benefit from having a portfolio of these income producing assets. This may include single family homes or condos, commercial properties, or mixed use properties.
Private lending has been growing in popularity and is likely to continue to gain traction for some years. This is an alternative to direct investment in bricks and mortar. It means providing your capital to other investors who do most of the heavy lifting in exchange for an attractive return, and often steady passive income stream. With Trump hoping to undo some tight restrictions around this sector more opportunities may emerge for private investors in the months ahead.
Note investing is essentially another form of private lending. However, instead of financing new loans sophisticated investors purchase existing real estate notes and mortgages, often at a sizable discount.
One common theme we have seen throughout American history and its most loved wealthy families and personalities is the investment in developing and constructing new buildings. For some it has been lavish hotels or condominium buildings. For others it has been libraries and parks. What will you build and add to the landscape as a legacy project?
ESSENTIAL MOVES FOR PROTECTING YOUR ESTATE
Essential Moves for Protecting Your Estate
Building up a business, portfolio, and estate to pass on is only part of the deal. Ask any experienced investor or executive and they’ll tell you that it is far easier to make a million, than to keep a million. What can and should you and your family be doing to preserve your wealth, assets, and gains?
Attorneys often get a bad rap, but you don’t want to be caught without a good one in your corner. Whether it is battling over a real estate deal, getting a partner to perform, of fending off a malicious lawsuit, you want the best defense you can afford. Rather than waiting until there is an issue to go hunt for help, it pays to have a strong law firm on retainer in advance. In America’s highly litigious environment it is not a matter of if you’ll need one, but when. Often just having a well-respected and feared attorney on call can deflect and deter many attempts to come after a share of your finances.
Legal Entities & Paperwork
While it may sound ironic; a piece of paper is often your best protection for your physical assets, real estate investments, and finances. Aside from the will, there are LLCs, trusts, and other entities and legal structures which can provide privacy and a shelter. Get them, use them well, and make sure you make no accounting blunders which could allow predatory law firms to ‘pierce the corporate veil’.
Unfortunately, one of the biggest threats that business owners, real estate investors, NYC landlords and wealthy families is frivolous and opportunistic lawsuits. It’s the American way. Thousands and thousands of suits are filed just to take advantage of others. We can’t change that mindset overnight. We can regularly use out right to vote and change the law. We can change the loop holes, make sure it isn’t too easy to victimize the innocent, and make it less attractive for law firms to hop from one trend to the next and seduce the masses into being so fast to sue. Use your right to vote at every level to protect yourself and your heirs.
Watch Your Taxes
If you aren’t careful taxes will eat it all up. There are estate taxes, capital gains taxes, taxes on investment income, property taxes, self-employment taxes, sales taxes, and more. Voting smart can help here too. So, can good accounting and selecting a great CPA who won’t leave you exposed to audits or the wrong type of attention from the IRS. Don’t forget to leverage legal tax shelters either. This includes vehicles such as self-directed retirement accounts and 1031 exchanges.