Disposition Of Real Estate Will Clauses - 3 Clauses (2 Pages)

ISSUE: Disposition of Real Estate
CLAUSE 1: Outright Disposition of Residential Real Estate to Specific Beneficiary
CLAUSE 2: Direct the Sale of the Residential Real Estate
CLAUSE 3: Create a Life Estate in the Residence for a Chosen Beneficiary

In many Wills, there is no separate or special clause addressing the disposition of the testator’s real estate interests. Often, these interests are jointly-owned, so they do not pass as part of the probate estate. Even where real estate interests are separately owned, they are frequently allowed to pass as part of the residuary estate without any specific directives.

However, situations may arise where the testator wants to make it clear which beneficiary is to receive an interest in real estate, rather than have it allocated as part of the residuary estate. In such a case, a simple dispositive clause is used. This clause is generally limited to residential real estate so that investment or business properties are not inadvertently included in the same provision. (Clause 1).

In some situations the testator may want to provide for an interest in real estate to be sold. This might occur when there may not be agreement among likely survivors as to the division of properties, so a sale is preferable.  Or, the testator wants a specific requirement that the real estate be sold in order to make the sale a “necessary” aspect of the estate administration so that the costs associated with the sale will be deductible as expenses of the estate administration. In these cases, a clause requiring a sale of the real estate is used (Clause 2).
Another situation may arise where a person wishes to allow a survivor to use real estate while the survivor is living, but not make the survivor the owner of the property. In this case the real estate is typically conveyed in a trust with the chosen survivor given a life estate, with remainder to other persons. An issue here is whether the survivor is responsible for the maintenance of the property during the life estate, or whether the costs of maintenance should be borne by the estate. These issues are addressed in (Clause 3).

Author:
Steven G. Siegel is president of The Siegel Group, a Morristown, New Jersey - based national consulting firm specializing in tax consulting, estate planning and advising family business owners and entrepreneurs. Mr. Siegel holds a BS from Georgetown University, a JD from Harvard Law School and an LLM in Taxation from New York University.

He is the author of several books, including: Planning for An Aging Population; Business Entities: Start to Finish; Taxation of Divorce and Separation; Income Taxation of Estates and Trusts, Preparing the Audit-Proof Federal Estate Tax Return, Putting It Together: Planning Estates for $5 million and Less, Family Business Succession Planning, Business Acquisitions: Representing Buyers and Sellers in the Sale of a Business; Dynasty Trusts; Planning with Intentionally-Defective Grantor Trusts; The Federal Gift Tax: A Comprehensive Analysis; Charitable Remainder Trusts, Grantor Trust Planning: QPRTs, GRATs and SCINs, The Estate Planning Course, The Retirement Planning Course, Retirement Distributions: Estate and Tax Planning Strategies; The Estate Administration Course, Tax Strategies for Closely-Held Businesses, and Tort Litigation Settlements: Tax and Financial Issues.

Mr. Siegel has lectured extensively throughout the United States on tax, business and estate planning topics on behalf of numerous organizations, including National Law Foundation, AICPA, CCH, National Tax Institute, National Society of Accountants, and many others.  He has served as an adjunct professor of law at Seton Hall and Rutgers University law schools.

The Siegel Group provides consulting services to accountants, attorneys, financial planners and life insurance professionals to assist them with the tax, estate and business planning and compliance issues confronting their clients. Based in Morristown, New Jersey, the Group has provided services throughout the United States. The Siegel Group does not sell any products. It is an entirely fee-based organization.
Contact the Siegel Group through its president, Steven G. Siegel, e-mail: [email protected].