Planning appropriately for family land is integral to preserving legacy and generational wealth. During my career, I’ve seen the best and the worst-case scenarios surrounding how best to plan for generational land transfer.
The most mind-blowing case I have encountered was when hundreds of acres of land went more than 100 years with no official probate or heirship proceedings. This land had to be apportioned to almost 100 possible heirs, and tens of thousands of dollars were spent in court (wasted) to establish who owned what portion of the acreage. Here are my three tips on how to avoid a situation like this!
- Stop procrastinating. If you know that grandma and grandpa’s estate was not settled correctly leaving you and your cousins to “share” some land that’s still in grandma and grandpa’s name - don’t wait another minute to get it straightened out. The longer you wait, the more likely it is that infighting will break out, witnesses will move away or die, essential paperwork will be lost, more heirs will need to be involved, and the cost to fix everything will increase exponentially.
- Don’t use online forms. If I have said it once, I’ve said it a thousand times: If you try to save money using online legal forms, especially deeds, you’re very likely going to spend exponentially more when correcting mistakes.
- Don’t assume all states are the same. Both estate planning and property laws are broadly the same in every state, but small idiosyncrasies exist and can make a big difference. The most common problem I see in Texas is that people assume there is an automatic right of survivorship in Texas deeds, but that is rarely the case.
Beyond, these tips it is important to stay abreast of federal and state laws that impact the inheritance tax, capital gains tax, changes to generational skipping trusts and more. Currently, there is a lot of TALK in Washington, DC about changing some of these tax structures, but nothing has been enacted as of 9.29.2021. Crain & Wooley will update clients as soon as we hear what, if any, action is taken in Washington impacting financial planning or estate planning laws.