29 Jan Strategies to Save Your Heirs Money in Property Taxes
In order to claim the testators’ property, the legal heirs of the dead person often pay a significant amount of money. However, there are several ways when someone can reduce the costs that his or her heirs will consider paying.
Here are three strategies that you can employ to reduce the cost of claiming property:
- Don’t Get Involved in Probate Process:
When you avoid the probate process, which means your heirs can avoid pay property taxes. In addition to this, your heirs can also avoid the expense and tiresome effort linked to the probate process.
- What is the probate process?
Probate refers to the process in which after the death of the person, the assets are disposed of in the probate estate. It follows certain rules to ensure that the rights of each party are protected- this also includes beneficiaries and creditors. In California, the common probate case includes filling out forms and following specific requirements.
- How to avoid probate process?
There are a few ways that you can avoid this process.
- The ultimate goal of avoiding this process is to ensure that at the time of the death, the testator has no asset(s). The person can definitely give away his or her property during a lifetime. But there is one drawback to this approach, for instance, the person may need to use the property during his or her own life.
- The second way is when the person owns the property as joint tenants where there is the right of survivorship- the testator owns the property with another person. When the person dies, the other person becomes the sole owner of the property. With the help of beneficiary designation forms, a person can transfer assets to the declared beneficiaries.
- Moreover, the person can make it payable on death account in which the beneficiary does not have immediate interest but receives funds when the person dies.
- Don’t Consider Property Tax Reassessments:
When the ownership of the property transfers, a reassessment is held. Following California’s Proposition 13, the tax reassessment leads to additional property taxes dues. But according to Proposition 58, a person can transfer the ownership to a child without changes in the rules of ownership which allows them to avoid the reassessment. But this is important to keep in mind that such reassessment can arise once the property is left to the child and wants to buy the share of the other child. The estate planning attorney can help in carrying out this strategy if there is any complication arise.
- Consider Setting up a Trust:
The benefit of setting up a trust helps in achieving the goals mentioned above. The trust legally owns the property. In order to make such trust, the grantor makes the trust, the trustee manages it and the beneficiary gets the benefits. If the trust is set up during the person’s life, it can be used to fulfill the grantor’s needs, moreover, the instructions are laid out to explain how the funds of this trust will be used for the benefit of the beneficiaries.
Setting up of trust allows a beneficiary to buy other person’s share without reassessment.
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