It may be a bit of a morbid topic, but we seem to be dealing with more and more estate sales these days and run into the same questions, concerns, and issues time and time again. As I think everyone is keenly aware, money can cause conflict between families and if the transfer of assets is not handled properly, or at all, it can cause irreparable damage to family relations.
So, what can you do to avoid some of the common issues we see around estate sales? Well first and foremost, you should make sure you have a clearly outlined will including specific beneficiaries, trustees, and a competent executor who will be responsible for navigating the process around dispersing your estates assets.
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It’s Not All Bad News
But even then, we see problems arise within families, where one or two of the beneficiaries challenge the direction of the proceeds of an estate. I’ve seen and heard some amazing stories when it comes to money and family history. And truthfully, once upon a time, I was under the impression that a properly worded document containing written direction in the form of a last will and testament would make for an ironclad argument about how and where to disperse funds. But as I’ve gained more experience dealing with these cases, I’ve come to understand that there is always room for interpretation, and when push comes to shove, these matters end in some form of negotiation between family members rather than arbitration by a judge. So no matter how hard you might try, conflict may still arise after
Which brings me to the only sure-fire way to ensure there are no disputes or confusion around your estate; manage the transfer yourself.
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An Ounce of Prevention…
Again, it may be a bit morbid for some to deal with the dispersion of their estate while they are still here, but the most successful transfers of wealth I’ve witnessed, are within families that take an active role in their estate and talk about who, how, and what is going to happen when the inevitable happens. Of course, some assets are easier to allocate than others because of their illiquidity or potential tax implications, and real estate comes with challenges in both categories.
Tax Challenges when Dispersing Real Estate
For now, though, your principal residence is free of any taxable gain and you can gift or allocate funds to dependents free of charge. I expect this will change some day as it has historically in other countries. As the value of estates and wealth within a country grows, governments seem to always find a way to claw back more and more through the addition or invention of more taxes. I’m sure we will see the advent of a principal residency tax and/ or inheritance/gift tax in my lifetime, but for now, you have complete control over all the equity in the family home. And although you may still have to deal with the liquidity issue, if you decide to sell and transfer funds during your lifetime instead of leaving your heirs to deal with it you can realize all sorts of benefits.
Working with a full-service real estate team is essential when dealing with complicated transactions. Here’s what you need to know about full-service teams.
Normal Listing Strategies Apply
Firstly, you’ll have clarity and control over the process. You can engage with your own accountant, lawyer, and most importantly in this case you real estate broker! This isn’t the space to go into more detail about how crucial it is to list your family home properly, or the difference a good listing agent can make to your bottom line.
Most of the time when we’re dealing with a decade’s long family home, it’s evident to everyone involved that the property will no doubt need a facelift from the next buyer, but showcasing the potential of the home is still crucial. Decluttering, cleaning, staging, and presentation are always paramount.
In addition to making sure you work with the right people and see top dollar for your property, you can also avoid additional probate and lawyer costs and often, where secondary properties are concerned, reduce your estate’s tax burden too.
Listing a home for sale is a lot of work! Read these posts next to get a better idea of the process:
The Biggest Benefit
Most importantly, selling the family home and taking an active role in your estate allows you to maintain the peace of mind that you’ve not only taken care of your next of kin, but taken the necessary steps to avoid any disputes or confusion that can often become destructive.
There is one major problem to overcome here, where do you go from here? The family home is now sold and change can be difficult for many people, so where are you going to live moving forward?
This seems like it needs an entirely new blog to hash out and it is obviously a very personal question which depends on any given individuals’ specific circumstances. But I will just say that over the years, I’ve helped a lot of downsizers, and regardless of whether they have rented, bought a condo, or moved to the cottage or alternative residence, I’ve always observed a sense of adventure within my client, perhaps one more intangible benefit from taking control.
Looking for home selling advice? We’re ready to help. Reach out at any time by calling 416.642.2660 or emailing admin@torontorealtygroup.com. We’re always happy to chat!
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