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A Guide to Real Estate to the Different Types of Real Estate Ownership With an Eye Towards Creditor Protection, Probate Avoidance and  Estate and Gift  tax Consequences

By

Todd E. Lutsky, Esq. L.L.M

To help illustrate the many different types of real estate and the variety of forms of ownership that go along with them, we will use our hypothetical family of John and Mary Public.  John and Mary are both age 65 and have three children, namely a son named Bob who is 25 years of age, a daughter named Barbara who is 30 years of age and another son named Bill who is 35 years of age, all of whom are married with children.  In addition, John and Mary own their own home, a vacation home, which is rented more often than it is used as a vacation home, three two-family rental properties and some investment accounts.

 

John and Mary’s entire estate is worth approximately $3,000,000 and all of their property is currently owned jointly.  The properties were purchased a long time ago and coupled with years of depreciation from renting them, all have a low cost basis for tax purposes. A friend of theirs, who is also in the rental business, was recently sued, which forced them to begin rethinking how they own their real estate from both a creditor and estate tax planning standpoint.

 

The balance of this article will explore the different forms of real estate ownership that are available to John and Mary for each type of property along with the probate, creditor and tax implications associated with each type of ownership.

Cushing & Dolan, P.C.

Attorneys at Law

375 Totten Pond Road, Suite 200

Waltham, MA  02451

Tel:  617-523-1555

Fax:  617-523-5653

www.cushingdolan.com

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