Many families consider their family home to be a very important possession. It is often very special to them and represents a significant amount of their wealth. Sadly, when homeowners pass away without making plans for their property, it can leave their loved ones with a big problem: a long legal battle over what to do with the family home, as well as the possibility of having to pay a large tax bill.
Research suggests that between now and 2045, $84.4 trillion of personal wealth will be passed down to the next generation. For most families, the family home represents over 70% of this wealth. This means that many families will inherit significant assets, including their family home, in the coming decades.
As a homeowner, it is important to make a plan for what will happen to your family home when you pass away. A well-planned estate can save your loved ones from stress, confusion, and unnecessary expenses. Here are some steps you can take to ensure that your heirs know what to do with the family home after you’re gone:
- Decide what you want to do with the family home: The most important thing you can do is to decide what you want to happen to your family home after you’re gone. Do you want it to be sold? Do you want to leave it to a specific family member? Do you want to donate it to charity? Whatever your decision is, make sure you discuss it with your family, and put it in writing in your estate plan.
- Speak with a financial planner: It is important to speak with a financial planner about the potential tax implications of your decision. Depending on what you decide, your heirs may have to pay capital gains tax, inheritance tax, or other taxes. A financial planner can help you make the best decision for your family and minimize the tax liability.
- Keep your estate plan up to date: Once you have a plan in place, it’s important to keep it up to date. Life changes quickly, and your plan should reflect those changes. Make sure you revisit your estate plan regularly to ensure that it still meets your wishes and the needs of your family.
- Talk to your heirs: Finally, it’s important to communicate your plan with your heirs. Discuss your wishes with your family, so they know what to expect and understand your reasoning. This can prevent confusion and misunderstandings down the road.
In summary, as a homeowner, it’s important to make a plan for your family home. Many families will inherit significant assets, including their family home, in the coming years. By making a well-executed estate plan, you can save your heirs from unnecessary stress, confusion, and expenses. So, take the time to make a plan, speak with a financial planner, keep your estate plan up to date, and communicate with your heirs. By doing so, you’ll ensure that your legacy is one that your family will cherish for generations to come.
