If you are a real estate owner, developer, or investor, you have worked hard to build your legacy (your portfolio of assets). But, what happens to your legacy if something happens to you? If you pass away or become disabled, do you want your family celebrating your legacy or trying to straighten out a giant mess.
Grieving families come to our office with bags or boxes of documents they don’t understand asking us where to start and what to do. I have seen entire portfolios fall apart after someone passes because the banks call the loans due and taxes are not paid on time. The last thing you want is all of your hard earned equity going to pay avoidable taxes and legal fees.
A little planning now can save your loved ones a lot of time, money and stress in the future.
At Diamond Real Estate Law, we work with real estate owners and professionals to help them create a plan and get their affairs in order. Here’s what you need to know about estate planning in Illinois if you own property.
Estate Planning for Property Owners in Illinois
When planning what will happen to your estate, you always want to consider the following:
- Who will take care of your loans and agreements
- Minimizing and deferring death taxes
- Ensuring your family has the same control over the money and assets as you do
- Creating a business continuity plan
- Having a process in place for someone to manage of all the assets
- Making sure there is money available for cash needs
If your investments are held by multiple entities or unrelated companies, you will need to make extra sure you have everything in order. This means you need to address all the partners separately, including all the lenders and various tax issues.
Creating Liquidity and Dealing with Lenders in Illinois
You need to make sure you have some form of liquidity as it will allow your children, spouse, or other beneficiaries to have continued support even after you’re gone.
Federal estate taxes are due nine months after death, so your family and loved ones barely have enough time to cover these expenses – especially if there is no liquidity provided for them.
Unfortunately, it’s best not to assume that your property can be sold or refinanced to give your loved one liquidity. This is because you don’t know what the real estate market will look like when you pass away.
It’s also important to make sure all your mortgages and loans are reviewed. Consider working with a McHenry real estate lawyer during this part to see if a separate entity guarantor can be added to the loan agreement. If this cannot happen, make sure the agreement allows for enough time to identify and install a guarantor.
If you do not have a guarantor on the loan agreements, your lender can put the loan into default which ends up being more complicated. It might also cause your family to have extra things or fees they need to pay.
Establishing Control and Continuity of Your Illinois Estate, Property, or Business
Make sure to review all the paperwork you have on joint ventures, limited partnerships, and operating agreements. Make sure you know who will have control over the property when you die by clearly expressing your wishes in your estate plan.
For a successor, you want to make sure it’s someone that you completely trust.
Keep in mind that whoever receives control of the property can also terminate any agreements you have, which can greatly reduce the cash flow that your family will receive.
Continuity is also important. Be sure to choose a successor who has the same ideas and plans in mind as you.
Contact Diamond Real Estate Today
If you have any questions about managing your real estate or creating an estate plan to ensure your family and legacy is protected, Diamond Real Estate is here to help. Contact us today to schedule your first consultation.
DISCLAIMER: Any information contained herein is solely for informational purposes. While it is important that you educate yourself, nothing herein should be construed as legal advice or create an attorney-client relationship. For specific questions, we urge you to contact a local attorney for advice pertaining to your specific legal needs.
