What kind of legacy would you say you’ll be leaving to children, trusted partners, family, and friends?
If you haven’t been thinking about it, this is the time to start.
Investing in Orlando real estate gives you a chance to build a lot of wealth around your real estate assets. This can be a huge source of comfort and possibility to the people closest to you once you’ve passed on.
As Orlando property managers, we work closely with investors who are looking for ways not only to enjoy consistent and recurring income on rental properties now, but also to establish sustainable wealth for the future. It’s about legacy and stewardship.
Let’s talk about estate planning and how to protect your Orlando real estate assets even when you’re not here to make decisions in the moment.
First: Establish a Will that Includes Orlando Real Estate Assets
Do you have a will in place already?
If you answered no, this is your first step. You won’t have much of a legacy at all if you don’t have a will in place. Owning even one property is reason enough to have a will. It’s important to leave specific directions about what’s to be done with it.
Estate planning starts with a legally drafted will which provides clear instructions on how your assets, including real estate, should be handled and distributed upon your death. It ensures that your property goes to your chosen beneficiaries and can help prevent disputes among heirs.
This is perhaps the easiest step, especially if you only have one or two properties and they’ll be handed off to an obvious person or people in your life. But wills can also become complex, especially if you come from a family who may be ready to dispute and argue and sue. Work with your attorney to anticipate every potential challenge.
Establish a Trust, Too
A will is a simple and relatively easy-to-produce legal document that delivers instructions to all of your beneficiaries and heirs for how to distribute any property and assets you have left behind after your death.
Trusts are different. A trust is a complex legal contract that allows you to transfer your property to an account to be managed by another person.
It’s important that there are no gaps in your estate plan. This is why we recommend that you have both a living trust and a will. Creating a living trust is an especially good option for those with a complex estate. If you have multiple properties, investment accounts, and/or sizable assets, you’ll want to make sure that they transfer easily to your heirs. Setting up a trust is also a good idea because it can offer more control over your real estate assets than a will.
A living trust, for example, allows you to transfer the ownership of your properties into the trust while you’re still alive, with directions on how they should be managed or distributed after your death.
Trusts can:
- Help avoid probate
- Offer privacy for the estate
- Provide tax benefits
You’ll want to assign a trustee to be responsible for the assets in the account on behalf of the beneficiaries. The assets within the account, including your real estate, will be distributed after death or at any other time you choose.
Utilize Joint Ownership for Orlando Real Estate Investments
Investors who are married will find it’s much easier to transfer real estate assets to a spouse after death, as long as those investment properties are jointly owned. Unless you have a reason not to assign joint ownership, do so before one of you passes on. Joint tenancy with the right of survivorship means that if one owner dies, the other automatically becomes the sole owner of the property, bypassing the probate process.
Tax Considerations with Estate Planning and Property
Understanding the tax implications of transferring real estate is critical and may impact how you decide to incorporate real estate and other assets into your estate planning. Consult a tax expert while you’re planning your estate.
Estate taxes can take a significant portion of your estate’s value, including real estate investments. However, planning strategies such as gifting portions of your property to heirs or placing them in a trust can mitigate these effects.
Creating an effective tax plan for your real estate doesn’t have to be a difficult part of your estate planning process. When you take the time to work with professionals and gather the right knowledge, you’ll find that coming up with a tax plan can save you money and protect your assets from excessive taxation before they reach your beneficiaries.
Florida does not have a state estate tax nor does it have an inheritance tax.
Your financial planner or tax attorney can provide advice on how best to manage your real estate assets now and which options will result in the most efficient use of your resources while minimizing taxes. Conduct periodic reviews of your plan with your tax and financial professional in order to maximize its benefits. With an effective estate tax plan in place for your real estate assets, you will gain peace of mind knowing that you are taking reasonable steps to protect your legacy.
Communicate with Your Beneficiaries Early
Your legacy will be stronger when there are fewer surprises. While it can be unpleasant to have discussions like this, you’ll want to have everyone in agreement about what will happen to your real estate once you pass.
One of the most overlooked aspects of estate planning is communication. Discuss your estate plan with your heirs to prepare them for the responsibilities they may inherit. Explaining your decisions can help prevent misunderstandings and conflicts after you’re gone.
You want to gather the interest levels of the people who stand to inherit your real estate, as well. There’s no point in leaving apartment buildings and rental properties to someone who does not care to be a real estate investor.
Interested in planning for your Orlando real estate investments beyond the present time? Let’s talk. We’ll help you leave a legacy you can be proud of. Please contact our team at Park Avenue Property Management. We work in Lake Buena Vista, Orlando, Kissimmee, Celebration, Maitland, Altamonte Springs, West Palm Beach, Tampa Bay, and throughout central Florida.
