When turning to renovation projects, there are often implications that need to be properly addressed.
When Remodeling a Home in a Trust with a Home Equity Loan
Homeowners with a proper estate plan often place their property in a revocable living trust (i.e., a living trust) to avoid probate. Placing property in a trust makes the trust the legal owner of the property, which requires drafting a new deed in the trust’s name.
A home equity loan is often used to pay for big expenses, such as a home improvement project. While it is not always the case, some lenders prefer to only extend a home equity line of credit to a person—not a trust. Depending on the bank, this could mean taking a property held in trust out of the trust and deeding it back to the homeowner. Before you agree to remove a home from your trust, inquire if the bank will accept an Attorney Opinion Letter on the trust instead, causing you much less inconvenience. If you deed your home out of the trust and back to you, make sure that the home gets transferred back to the trust if you want to avoid probate. Your estate planning attorney can help you with these transfers of the deed.
Increasing a Home’s Value and Beneficiaries
A knowledgeable real estate agent can help you evaluate the potential of your home improvement plans. With or without major renovations, a home purchased years ago is likely to have appreciated over time. Home value changes may affect a homeowner’s estate plan. If wanting to treat beneficiaries equally, an estate plan may need to be refigured to equalize each beneficiary’s inheritance.
One option, to help avoid conflict, is to leave the home to more than one person in your estate plan, and in doing so, work with your attorney to stipulate how the home will be co-owned with a plan for the recipients to sell their interests in it.
Revising Your Estate Plan After Home Improvement
Once you have finished remodeling your home, you should consider remodeling your estate plan. In addition to home improvements, there may have been other life events in recent years that warrant an estate plan update. Making changes will help buy peace of mind knowing your plan reflects your current wishes.
Look for The Property Sisters monthly segment in Stroll Palos Park, or contact:
Bridget Gricus (708) 814-6253, bridgetgricus@gmail.com
Eileen Kerlin Walsh (708) 448-5169, Eileen@KerlinWalshLaw.com
