Estate Planning for Property Investors

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Everyone needs an estate plan, regardless of the estate’s size.

For property investors, having an estate plan strategy in place is important for asset protection, planning for taxes, and handling transfer of ownership.

There are three basic elements of an estate plan:

  • Will – this is a document that lets you designate how your property will be distributed.
  • Durable power of attorney (POA) – this authorizes your selected agent to handle financial affairs if you were to become incapacitated
  • Trusts distribute assets to beneficiaries and help keep property outside the probate process

Estate planning helps you manage your financial affairs while you are living and ensures that your wishes are carried out after your passing.

According to Kris Maksimovich, AIF®, CRPC® the president of Global Wealth Advisors, estate plans also enable property investors to:

  • Avoid disruption of your property investing business during any transition
  • Quickly settle any issues related to your estate, and minimizes expenses of doing so
  • Plan for and reduce taxes owed after your death
  • Help provide financial support to family and friends
  • Direct any funds you want to go to your favorite charity or religious group

Asset Protection

Though no asset protection tool will completely insulate you from tax collectors, accident victims, healthcare providers, credit issuers, business creditors and others, utilizing a variety of estate planning strategies, may help. When it comes to your property investing business, you may want to consider the following strategies:

  • Insurance is your best line of defense. Consider purchasing or increasing an umbrella policy or your homeowner’s policy. Purchase or increase coverage for business-related liability.
  • Declare a homestead exemption to protect the family residence. Often, your primary residence is your most significant asset. Filling out a simple form and paying a small fee in the state of your main residence can help protect you from judgement and creditors.
  • Dividing assets between spouses. This can limit exposure to creditors as they can only reach assets in your name.
  • Shield personal assets from business creditors. Consider operating the business under a limited liability company, corporation or limited partnership. Estate plans can also help shield the business from liability of a shareholder’s personal creditors.

Planning for taxes and avoiding probate using trusts

One of the benefits of trusts in estate planning is to avoid probate and help with planning for taxes you or your heirs may pay on your investment properties. They can also be used as a tool to protect your beneficiaries from squandering assets after your death since a trustee holds full authority to make decisions on how any funds may be spent. Here are the types of trusts:

Revocable vs. Irrevocable Trusts

  • Revocable trusts can be altered or canceled, and beneficiaries can be removed. Assets in a revocable trust still belong to you and because revocable trusts share your social security number, you’ll have to pay taxes accordingly.
  • In an irrevocable trust, beneficiaries cannot be removed without the approval of everyone named in the trust. Once funded, assets are protected from any claims against you because the trust becomes the owner of that property. Likewise, any taxes would apply to the trust as well.

Standby Trust

A standby trust is a type of trust where your property is not transferred to the trust when it is created. This type of trust stands idle until it is needed, such as if you become incapacitated. The trust can be funded by transferring property to it through the POA, should incapacitation occur.

Once the trust is funded, the trustee can control your property as outlined in the terms of the trust. The benefit of a standby trust is that:

  • You continue to control your property until you become incapacitated
  • It enables you to name someone you trust as a beneficiary who is qualified to manage your property
  • It avoids the need for guardianship because your designated trustee takes over immediately upon your incapacitation
  • It may serve your estate planning objectives by enabling the property funded to the trust to pass to designated beneficiaries upon your death

Qualified Personal Residence Trust

A qualified personal residence trust removes the property from the estate and helps you avoid federal estate tax while still allowing you to live in the property for a predetermined amount of time. To realize the tax benefits, you must outlive the term of the trust.

This type of trust is beneficial because the property’s value is adjusted to reflect the period of time you lived there, which may offset all or part of any gift tax for your beneficiaries upon your death.

A Caveat About Trusts

Trusts are a great tool for transfer of ownership of your assets, but the court will ignore transfers to an asset protection trust if:

  • You die before the property is transferred to a trust, you may not be able to avoid probate
  • A creditor’s claim arose before you made the transfer to the trust
  • You made the transfer with the intent to defraud a creditor
  • You incurred debts without a reasonable expectation of paying them

Though the cost to create trusts can be high, it might be worth it if the value of your property holdings is significant.

Transfer of Ownership

Estate plans help to smooth the transfer of asset ownership during and after your life. To this end, it’s important to note that trusts only work when funded. Merely owning a will and list of beneficiaries is not enough.

Trusts are a great tool for the transfer of ownership of your assets, but funding a trust takes time and patience. Assets must be titled or deeded in the name of the trust. Funding investment accounts to a trust requires you submit a change of ownership forms to the investment holder.


There are sometimes misconceptions about the control a will has over some assets. Transfer of investment accounts like an IRA, 401(k), 403(b), Roth IRA, life insurance policies, annuities, and thrift savings plans are generally handled by designating beneficiaries with the account issuer, even if your will states otherwise.

It’s a good idea to reconcile your will against your selected beneficiaries for these types of investments to confirm who gets the money upon your death.

Gifting Shares

If you place the property in a corporation and gift shares to heirs during your lifetime, the real estate and ownership can pass outside of your estate and may not be subject to estate tax, though the lifetime gifts of shares will be subject to the regular tax rule.

As with all property investment strategies, it’s a good idea for you to seek the advice of your trusted financial advisor. They can put you in touch with a tax professional or lawyer to help you determine the best strategies to use.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. You should consult a tax preparer, professional tax advisor, and/or a lawyer regarding your individual situation.


Authored by Kris Maksimovich, AIF®, CRPC® president of Global Wealth Advisors.

Kris Maksimovich is a financial advisor located at Global Wealth Advisors 18170 Dallas Parkway, Suite 103, Dallas, TX 75287. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at (972) 931-3818 or at

© 2019 GWA®