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Estate Planning for New Homeowners

On Behalf of | Jan 16, 2024 | Estate Planning

Transitioning into homeownership is a significant milestone, which may prompt new homeowners to consider their broader financial picture, including estate planning. Estate planning is crucial for anyone looking to secure their financial legacy and provide for their loved ones.

New homeowners need to understand how estate planning can protect this investment. Among other things, estate planning helps to ensure that their property and other assets are distributed according to their wishes when they die.

Understanding wills and trusts

A will is a basic list of assets and where they should go. Without a will, state laws determine asset distribution, which might not align with the homeowner’s wishes. A trust offers more control and can help manage assets during and after the homeowner’s lifetime. Certain kinds of trusts can also provide tax benefits and protect assets from legal and creditor issues.

Beneficiary designations and joint ownership

For new homeowners, reviewing and updating beneficiary designations on financial accounts like life insurance policies, retirement accounts and bank accounts is important. These designations often supersede instructions in a will, making them a critical component of estate planning. These funds can be used for payments on the home, including mortgage, homeowners insurance, maintenance and taxes.

Additionally, understanding the implications of how the home is titled is essential. Joint ownership with rights of survivorship ensures that the property automatically passes to the surviving owner without going through probate.

Advance directives and powers of attorney

Estate planning also involves preparing for potential incapacitation. A durable power of attorney for finances allows homeowners to designate someone to make financial decisions on their behalf if they are unable to do so. This includes powers to make mortgage payments and take care of upkeep of the home.

Regular reviews and updates

Life changes, such as the birth of a child, marriage or significant changes in financial status, warrant a review and possible update of an estate plan. Seeking legal guidance to better ensure that one’s estate plan aligns with the current wishes of the creator is critical to keep a home protected and passed down accordingly.