Making a will is the only way for a real estate investor to have an influence over events that will unfold after his/her demise. In some cases, this includes issues of personal significance but in a lot of cases, this is focused on the distribution of one’s assets amongst their successors. The biggest problem with this lies in the fact that if you leave this up to the court or the settlement amongst successors, the end result might not be as great as you would want it to be. The court and estimators only see value and number, while there might be more in play.
Before we start, one of the things that’s incredibly important is the fact that a lot of people start their investment portfolio in their 20s, 30s or 40s, when they’re still too young to think about drafting a will. The problem, however, lies in the fact that we can never know when our time will run out and being ready is always better than being sorry.
Related: How to Invest in Real Estate in Your 20s
On the other hand, except for those who are quite superstitious, there really is not a single downside of drafting a will at any point in your life. So, the real question isn’t really why is it such a good idea but rather why wouldn’t it be? Moreover, here are several persuasive arguments why this is particularly important if you are a real estate investor.
1. Continuation of Your Plans
There are some amongst your successors who will keep working on your plans and legacy, while others will see this as merely financial gain. To some, this home can be a source of income and a platform for future business successes. On the other hand, there are those who would just sell the place (even under value) just in order to receive cold, hard cash. As a serious real estate investor and someone who has put so much time and effort into these investments, it’s more than obvious that you want to prevent this from taking place.
2. Personal Relationships
Keep in mind that personal factor plays a major role here, due to the fact that the court isn’t likely to take your personal relationship or your opinion towards successors as a valid metric. All they’ll do is look at the way in which you’re related to the person in question. Needless to say, this may end in a scenario where the person you loved the most gets next to nothing while others (who you might have held a grudge with for most of your life) get the biggest share of your real estate assets. In order not to allow this to happen, you need to have your desires and intentions clearly stated in your will.
3. Avoiding a Succession War
History is filled with succession wars and a similar thing, to a smaller scale, could happen amongst your successors as well. Provided that you aim to avoid this, what you need to do is make a compromise that will make everyone happy (or, at least, make everyone equally unhappy as every true compromise does). Remember that you alone know your successors far better than any court or estimator ever could, which is why your judgment is most likely to have this effect. Also, if you can avoid conflict between your children or relatives, why wouldn’t you do such a thing?
Nonetheless, in order to make this contract legally binding, you need to find some skilled legal help. The reason why going local is so important here is due to the fact that you need someone who knows both state and federal inheritance law, as well as property law. This way, you’ll make this transition as smooth as possible. Also, bear in mind that by choosing a law firm that has nearby headquarters, you’ll be able to collaborate with them more efficiently. For instance, if you’re situated in the northernmost part of Sydney (as well as the majority of your investment property), finding specialized wills lawyers in Northern Beaches would be the best course of action.
4. Taking Care of Your Successors
Another important thing you need to take into consideration is the fact that some of your successors may depend on your last will in order to change or keep their current lifestyle. For instance, unless you leave your living companion the home that you’ve lived at, they are likely to be evicted by the successor. Other than this, your real estate investment is a source of income, which is why by not leaving it to someone, it may become a major existential issue in their life. Provided that the person in question is close, as they most likely are, this will be an incredibly important thing to take care of.
5. Sentimental Reasons
The previous part leads us to one relevant issue, one of sentimental reasons. You see, one of your successors may be emotionally attached to one of your properties and it’s incredibly important for you that they are the ones who inherit it. It could be their family home or a place where they spent some of the best days of their lives. This is one more reason why you need to be the one to determine who gets which real estate asset, instead of allowing for this to be decided by others. Provided that you have more such properties, you can also assign successors according to their proximity to the property in question (amongst other things). Court, on the other hand, is in no way obliged to make these considerations.
In Conclusion
Of course, there are always some people who just don’t care what happens to their assets (or anything else for that matter) after they’re gone; however, this is not true for the vast majority of people. So, if you want to see your legacy carried on, people you love taken care of and your memory honored, you, as a real estate investor, need to make your will as best as you can. Start as soon as possible and don’t be afraid to alter your will on a later date. After all, things change, your assets grow and for a lot of real estate investors in their twenties, the list of successors grows, as well.
This article has been contributed by Emily Wilson.