Challenges in Estate Planning with Investment Real Estate

The article provides an in-depth analysis of the key challenges in estate planning for clients with significant real estate investments. First, it highlights the complexities of determining asset value, especially when dealing with varied property types such as residential, commercial, or rental properties. Market fluctuations, local conditions, and valuation techniques all influence the estate's worth, making accurate assessments difficult.

A major challenge addressed is liquidity. Unlike stocks or bonds, real estate isn't easily converted to cash, which complicates paying estate taxes or debts. This is especially important in high-value properties that don't generate sufficient cash flow. The article suggests strategies like taking out life insurance policies or selling certain assets to ensure liquidity.

Another critical issue is succession planning. Real estate assets may face legal disputes or management challenges if not handled properly. The article recommends creating trusts, outlining detailed plans for transferring properties, and considering family dynamics in structuring the estate. Long-term legal and financial planning is essential to avoid complications during the transition, making real estate an intricate aspect of estate planning.

For more information see Mary P. O'Reilly and Andrew L. Baron, "Challenges in Estate Planning with Investment Real Estate" ABA Probate and Property Journal, September 1, 2024.