Real estate succession planning requires a close look at your goals and wishes for your family and the future of your real estate business.
Expert and long-time real estate investors suggest Succession Planning should start with your vision for your real estate investments. Determine who the leadership should be. If it’s a family member, assess whether that person needs any further leadership, business, or management training to ensure your business the greatest chance for continued success. On the other hand, you may want to hire a property management professional for your business’s hands-on aspects while mentoring your heir in managing the higher-level aspects of your estate. If you don’t have one already, create an LLC for your family business to clarify business assets from personal and formalize the eventual transition plan.
The next topic to consider will be the legacy elements that are important to you. Discuss these with your family and get clear on their vision for the family business as well. How will you modernize as the times change? What elements of legacy do you want to see maintained regardless of how times change?
These questions and more will be essential to address in your real estate succession planning. The Moschetti Law Group has extensive experience helping clients navigate these conversations and ensuring that none of the crucial questions are left out.
Succession doesn’t have to happen all at once after you’re gone, either.
Consider ways that you might begin to transfer assets before they become inheritance. You might be looking to divest a particular asset and realize that your divestment could become your heir’s investment. Or, you might choose to purchase a new property in your heir’s name. Making new investments under their name can serve the dual purpose of lowering your estate taxes and providing the necessary real estate experience to your business’s future leader.
You may also want to create an Intentionally Defective Grantor Trust, which removes certain assets from your estate (and therefore from estate tax liability upon transfer). At the same time, you still own that asset for income tax purposes.
Whatever your specific situation and estate goals, the Moschetti Law Group can help create a solid succession strategy for you and your family. We have helped hundreds of real estate owners and investors with our integrated estate and succession planning approach.