There are a few times when it’s a good idea to add items to your estate plan or to update your estate plan to be sure it is as protective as it can be. One of the times when you should update your estate plan is if you’ve purchased a piece of property.
As a person who has just bought your first family home, it’s a good time to look at how you can protect that home and yourself through estate planning.
Plan for the future of your home
With an estate plan, the goal is to plan for the future of your home. This means sitting down and deciding what you’d like to do with your property. For example, do you want to leave your home to your child if you pass away? You can include that information in your will and set up a trust to hold your home before passing it on to your child.
Do you need to protect your estate against taxation? If you’d like to do that, you may want to add your home to an irrevocable trust that takes it out of your name and holds it for your heirs in the future. This protects your home against creditors, may help you qualify for Medicaid and has tax benefits.
Consider the home’s mortgage when you add it to your estate plan
Another thing to do is to think about your home’s mortgage. If it still has one, then you should consider having a life insurance policy that would cover the mortgage or provide your heirs with the money needed to pay the mortgage until the property could be sold. You could write out instructions for the life insurance to cover the cost of the home and then send that lift insurance coverage directly into a trust belonging to the heir who will receive the property.
These and other issues are why it’s a good idea to look into your legal options for protecting your assets and heirs through estate planning. A good estate plan can help your heirs get a greater inheritance, which may include your family home.