Estate Planning and Real Estate: What to Know This Year
Estate planning and real estate are two major topics that often intersect, especially for families and individuals who are looking to secure their financial future. This year, it’s important for both homeowners and investors to be aware of the changes and updates in estate planning and real estate laws to ensure that their assets are protected and their properties are managed efficiently. In this article, we’ll take a closer look at the key factors that individuals and families should know about estate planning and real estate in 2021.
Estate Planning: The Basics
Before we discuss the specifics of estate planning and real estate, it’s important to have a basic understanding of what estate planning is all about. Estate planning refers to the process of legally preparing for the management and distribution of a person’s assets after their death. This typically includes properties, investments, and other valuable assets.
Most people tend to think that estate planning is only for the wealthy, but that couldn’t be further from the truth. In fact, anyone who owns assets should have an estate plan in place to protect their loved ones and ensure that their assets are distributed according to their wishes.
Real Estate: The Role in Estate Planning
Real estate is often considered to be one of the most important assets in an individual’s estate. It’s essential for individuals to have a plan for their real estate in their overall estate planning process. This ensures that their properties are managed and transferred seamlessly after their death.
In order to include real estate in your estate plan, you must have a clear understanding of the different types of property ownership. The most common types include sole ownership, joint tenancy, tenancy in common, and community property. Each type has different implications on the distribution of the property after an individual’s death.
2021: Changes in Estate Planning and Real Estate
New Laws and Regulations
There are several changes in the estate planning and real estate laws that individuals should be aware of this year. In 2021, the estate tax exemption has increased to $11.7 million for individuals and $23.4 million for married couples. This means that estates with a value below these thresholds will not be subject to federal estate tax.
In addition, there have been changes made to the Capital Gains Tax rate, which is the tax rate at which assets are taxed when sold. The new rates for long-term capital gains range from 0% to 20%, depending on the individual’s income. This change can have a significant impact on how individuals choose to transfer or sell their real estate properties.
Impact of COVID-19
The COVID-19 pandemic has also brought about changes and challenges in estate planning and real estate. With the uncertainty of when the pandemic will end, it’s important for individuals to have an updated estate plan in place. This includes having a will, power of attorney, and healthcare directives.
Real estate has also been affected by the pandemic, with many individuals facing financial difficulties and struggling to pay their mortgage or property taxes. This has led to an increase in foreclosures and short sales, making it essential for homeowners to stay informed about their options and discuss them with their estate planning attorney.
Tips for Effective Estate Planning and Real Estate Management
Start Early
It’s never too early to start thinking about estate planning and managing your real estate. In fact, the earlier you start, the more time you have to make informed decisions and ensure that your wishes are carried out.
Regularly Review and Update Your Plan
Estate planning and real estate management should not be a one-time event. As times and circumstances change, it’s important to regularly review and update your plan to ensure that it reflects your current wishes and financial situation.
Consult with Professionals
Estate planning and real estate can be complex and overwhelming for most individuals. It’s highly recommended to seek professional help from an estate planning attorney and a real estate agent to fully understand your options and make the best decisions for your assets.
In Conclusion
Estate planning and real estate go hand in hand, and it’s crucial for individuals to have a good understanding of both to secure their financial future. With the changes in laws and the impact of the pandemic, it’s important to stay informed and regularly review your estate plan and real estate management. By following the tips mentioned above and seeking professional help, you can ensure that your assets are protected and your wishes are carried out after your death.
