Whether you’ve amassed a portfolio of properties or are just beginning to develop your real estate holdings, it’s not too early to consider the legacy you’re going to leave behind.
Will your legacy be one that your heirs fight over?
Will your legacy be one that eventually goes to pay attorney’s fees?
Or will your legacy benefit your loved ones and provide for their long-term future?
Your heirs may not share the same affinity for building and running your business as you do. They may have different career paths. They may still be in school or be too young to really understand or appreciate your efforts. If one of these is true, then it’s up to you to make sure your legacy continues.
The Benefits of Hiring a Professional Trustee to Handle Your Estate and Real Estate Holdings
In many families, the older generation creates and manages the wealth, in this case your real estate holdings, and is responsible for the distribution (if any) of the wealth to the family members. In some families, after the older generation is gone, the younger generation is incapable of managing the assets.
If the younger generation of your family lacks the skillset to maintain, let alone grow your portfolio, it’s possible that your legacy will be gone when you are no longer here to keep it going.
As difficult as it can be to build your portfolio, conveying those assets to future generations can be even more challenging. There are multiple ways to ensure your assets stay in your family for future generations. You can create a will and leave detailed instructions for the executor of your estate. You can add your family members as partners to your current business and avoid any hassles giving them the business when you die. You can transfer all your assets to your children now and let them take care of you until you pass.
While each of these options may appear to be reasonable, each one has pitfalls that make them less than desirable.
Creating a will can be a good idea, but a will is not comprehensive; it isn’t the only solution you need. Ideally, your will should be a single component of a much larger plan. That plan should include your trust, your trust directives and details, your asset allocation, and your final wishes. Only then can you be assured that your last will and testament will be able to perform the way you intend.
Adding family members as partners to your business seems like a good idea, but diluting your current interest in your asset may not be your best option. Inevitably, a family member will feel left out or believe that they did not receive a large enough ownership share upon distribution. They will become upset and bad feeling will arise. This is never a good thing for a family, especially when all you are trying to do is provide for them and share your legacy with future generations. Whether your family members purchase their shares of ownership or you grant the shares to them, a division of responsibilities will need to be determined.
Transferring all of your interest to your children before you pass allows them to assume full responsibility and control of the asset. This action can potentially lead to even more questions and concerns: Are all your children given equal shares? Is each child responsible enough to “pull their own weight” and willing to work in the real estate trade? Does your granting of property over to your children create animosity and in-fighting between your children? Something you were looking to avoid on the onset.
Every one of these options has both benefits and pitfalls. None of them may be the best solution for what you are trying to do: ensure your legacy survives, thrives, and provides benefit for your heirs and the future generations of your family.
Fortunately, there is a simpler way. You can create a trust that holds your assets and you can name your heirs as the beneficiaries of the trust in the event of your death. By creating the trust before you die, you can be sure the trust documents reflect your desires. By appointing a professional trustee to oversee the execution of your trust documents, you ensure your legacy for years to come.
The sooner you begin the process of creating your family trust and the sooner you put your professional administrative trustee in place, the sooner you can have the peace of mind that your legacy will continue after you are gone.
It’s easy to focus on building your business without enough focus on maintaining your business long term after you’re gone. That’s why you need a professional administrative trustee.
Investment properties like apartments, duplexes, or vacation rentals can bring a steady stream of income to you and your family. But what happens when you’re gone? Is your family ready to take control and manage what you’ve built? Or will the portfolio you created be sold and liquidated?
The Administrative Trustee
A professional administrative trustee with experience in property management and real estate can make all the difference in the world when it comes to preserving your legacy. A skilled administrative trustee, with the right professional relationships, may even be able to increase your assets values.
Because the assets of the trust (in this case, real estate holdings) require specific expertise, it is crucial that the administrative trustee have substantial experience in real estate. The trustee must understand real estate terminology, real estate finance, brokerage, acquisitions, and dispositions. It would be a mistake to rely on a trustee without an in-depth knowledge of commercial real estate to administer your estate, your lifetime accomplishments, and your legacy.
The administrative trustee must also be able to handle a variety of requests from the beneficiaries of your trust. They must be able to determine if the requests are valid and in line with the trust documents, before they make a decision about that request. You need to feel confident that your administrative trustee can make that determination in your absence.
The administrative trustee must be able to take specific directives as stated in the trust instrument, and they must also be able to work within any state laws governing the trust.
In addition, the administrative trustee you select must be able to manage the familial social dynamic and be able to identify and diffuse any in-fighting amongst the heirs.
- Do you trust your heirs to manage your estate and real estate holdings?
- Do you want your legacy to continue and benefit your heirs after you are gone?
- Do you worry that your children and beneficiaries might not be able to take care of things without your help?
If you answered yes to any of these questions, it’s time to consider how a professional trustee can help administer and execute your long-term goals regarding your real estate holdings after your passing. The right professional trustee can help you leave your legacy intact.
Scott Yahraus is a professional trustee, founding partner of The Trustee Group, and expert in business management and trust administration. Mr. Yahraus has experience in commercial real estate and general business. Mr. Yahraus holds a degree in Economics from Creighton University in Omaha, Nebraska. For more information, call (310) 552-5315 or visit www.thetrusteegroup.com .