REAL ESTATE: Pitfalls of Intra-Family Real Estate Transactions – Part Two

INTRO: In Part One of this series, I spoke about real estate transactions that frequently involve overlapping estate planning considerations, and often require amending the client’s estate planning documents (including, primarily, their Living Trusts). Here are more transactions that offer potential pitfalls.

Living Trust/Will – When people gift property to one but not all of their loved ones, they’re often inclined to adjust (i.e. increase) how much their other loved ones (those not receiving the real estate gift) will receive on the owner’s death. When owners fail to work with their estate planning attorney to affirmatively make such formal estate planning document changes, troublesome unintended consequences can result.

Mortgages – When a gifted property still has a mortgage, the transfer by gift or sale nearly always gives the lender the option to call the full loan balance due immediately.

Fractional Interest Gifts – If a fractional interest in real estate is gifted, key decisions should be made and steps should be taken in addition to those set forth above. These include decisions and agreements among the co-owners about: titling; management; respective rights and obligations; and succession of interests if a co-owner dies. Accordingly, it is generally wise to have an attorney draft a comprehensive “co-ownership” agreement.

This article is intended to provide information of a general nature, and should not be relied upon as legal, tax, financial and/or business advice. Readers should obtain and rely upon specific advice only from their own qualified professional advisors. This communication is not intended or written to be used, for the purpose of: i) avoiding penalties under the Internal Revenue Code; or ii) promoting, marketing, or recommending to another party any matters addressed herein.

Mr. Silverman is an attorney with R. Silverman Law Group, 1855 Olympic Blvd., Suite 125, Walnut Creek, CA 94596; (925) 705-4474; rsilverman@rsilvermanlaw.com.

REAL ESTATE LEGAL SERVICES: Need to find a real estate planning attorney in Walnut Creek CA? Contact Robert Silverman at 925-705-4474 for legal advice on Real Estate Titling, Limited Liability Company (LLC) Formation, Purchase/Sale Transactions (Residential & Commercial), Commercial Leasing, Real Estate Legal Representation, Joint Ownership (aka T.I.C or Equity Share) Agreements, Buyer/Seller Disputes, and Promissory Notes & Deeds of Trust.