Delaware has tax benefits that make it appealing for those wanting to retire there. Many consider buying a second home. For those who make that decision, it may lead to years of satisfied relaxation in their later years.
But sooner or later, those same people may need to consider who the house is going to when it is time to divide an estate. A second home may sound like a pleasant inheritance, but it might instead be a headache to any beneficiaries.
Placing the home in a will or revocable trust
Divesting a home to beneficiaries through a will lets owners keep full control over the property until their death. As Kiplinger points out, though, it does not avoid the time-consuming process of probate.
A revocable trust establishes a set of rules that the trustee has the authority to change. These trusts are useful for handling multiple owners by creating contracts like operating agreements.
Neither of these transfer methods has an effect on estate taxes.
Using an irrevocable trust
An irrevocable trust allows an owner to divest their property into a personal residence trust. The word irrevocable is the key term here, though, as shifting the rules of these trusts take a lot more doing. The property is no longer the owner’s — it is the trust’s. But there are ways an irrevocable trust shelters a property from taxes compared to a revocable trust.
Gifting while alive
According to Fiduciary Trust, the current tax exclusion for gifts caps at $15,000. But with the right estate planning, owners may gift a property incrementally or all at once.
Handling the responsibility that comes with multiple properties may seem daunting. With the right resources and clear communication with heirs, owners have the tools to make property transfer as smooth as possible.