Real Estate Tip – Keep It in The Family?
Using a will to give a commercial building to a loved one, a business partner or even a charitable organization is not ideal planning. Adverse tax consequences, the public probate process and operational difficulties aside, the building may not become the property of its intended owner. Example: Sr. writes a will giving a building to Jr. but decides later that his business partner George should get title to the building. As the 1997 New Hampshire case In re Estate of Laura 141 N.H. 628, 690 A.2d 1011 discusses in detail, the application or misapplication of a legal doctrine called Dependent Relative Revocation could result in that will change being:
- Ignored, leaving Jr. with the building
- Read to revoke the first Will but not make a valid change, leaving all of Sr.’s heirs holding the building as tenants in common
- Read to leave the building to George
Few building or business owners are comfortable with this level of uncertainty. Using trusts, LLCs, and direct transfers while alive provide far more certainty as well as the opportunity for better tax and operational planning. When deciding who should be the next owner of a building, consult lawyers familiar not only with real estate but with wealth management and planning.
Today’s real estate tip is brought to you by Rick Smith, a LEED Accredited Professional and member of Bernstein Shur’s Real Estate Practice Group and Green Building Team. Stay tuned for more useful tips for real estate professionals.
For more information, contact Rick at email@example.com or 603 623-8700 ext. 8829 or 207 774-1200.