After creating your estate plan, many different situations can arise that create a need for modifying your documents. One such example is when you purchase a new asset. The type of modification that you need for your estate plan depends on the type of asset that you have acquired. Rental properties are no different. If you now own an investment property that you did not have at the time you set up your estate plan, it is time to consult with your attorney about an update.
Why it Is Important to Consider Modifying your Documents When You Buy a Rental Property
Why is it so important for you to modify your documents after you acquire a rental property? The following is an overview:
- Your new asset may be subject to probate court oversight after you pass away if you do not take the proper steps to update your estate plan.
- If you become incapacitated and have not updated your estate plan to specifically deal with your rental property, there may not be a smooth and efficient mechanism in place to allow your loved one to step in and take care of the property. For example, even if you are disabled, any loans that you have on the property must continue to be paid. Banks will be reluctant to work with anyone who does not have proper documentation of their authority to deal with the property.
- Failing to update your estate plan to consider the new asset could lead to unintended results. For example, you may have intended for the property to go to one person, but under the terms of your will, all of your assets are to be left to the other person. Without updating your estate plan, an unintended result will occur.
- Rental properties are valuable assets; however, they also present significant risks to their owners. Tenants or visitors to the property who are injured may try to sue you personally as the landowner. Updating your estate plan could provide you with a measure of asset protection in the event that this occurs.
Now that you understand how important it is to keep your estate plan up to date, it is time to take action. We encourage you to reach out to us today. Send us an email!