When some millennials become homeowners, they think of two things:
1. Payment related items -- Mortgage, maintenance fee, association fee, and insurance.
2. Home Maintenance -- Do I need I remodel my kitchen? How will it cost to re-roof? How much will it cost to fix my leaky toilet?
These two topics are very important. However, most homeowners (not just millennials) often overlook the estate planning side of homeownership.
Estate planning is a very broad topic. To simplify things, estate planning, in reference to homeownership, usually refers to the following:
Placing your home in a trust
Placing your home in a trust could help you avoid probate court. Probate court could take months or years.
In addition, if your home is placed in a trust, your trustee can manage your trust (and other assets) if you become incapacitated. When you create your trust, it's important you speak with your estate planning attorney on who you should chose for your trustee.
Go one step further...When you decide on a trustee, speak to that person. Don't assume that person will accept the trustee position. Talking about this isn't the easiest thing. Take the time to tell the person why you think they would make a great trustee for your estate. If the person is unfamiliar with estate planning, but is interested in being your trustee, it might be beneficial to have that person speak to your estate planning attorney.
For whatever the reason, estate planning usually gets classified as an old person thing. I can see why. However, as you start to build your wealth, having a trust could help you protect your assets. You can start early and then tailor your estate planning documents as you get older.
Do you have a will?
Wills and trusts usually go hand-in-hand. When you speak to an estate attorney, it's important you understand the difference between a living will and a last will and testament.
In your will, you can state what you want to do with your home after you pass away. Talking about your death is not easy. However, it's a conversation that needs to be done. For example, when you die:
- Do you want your estate to sell your home?
- If you sell your home, what do you want to do with the proceeds? Give it to family? Donate it?
Here's something you might overlook. What happens if you get injured and you need 24-hour nursing care. Do you sell your house to pay for your medical coverage? These are things you need to think about. Don't leave it your trustee to figure it out.
Don't forget your other assets too...As you can see, your will can be basic or very detailed.
It could be beneficial to explain your will to your trustee. Your trustee is to act on what's best for the trust, not his/her personal interest.
-RO