Real estate transactions are one of life’s major milestones… whether it’s purchasing a first home, a second property for personal or investment purposes, or selling a longtime residence. But beyond the financial and logistical aspects, I find these transactions frequently serve as a catalyst for estate planning updates. Buying or selling a home naturally prompts individuals to reevaluate how their assets are structured, who has decision-making authority, and whether their estate plan still aligns with their current life circumstances. That said, it’s easy to have tunnel vision given all that’s involved in a real estate transaction. Sometimes you just want to make it to the finish line and move on! Try to make the most of your time with your attorney by addressing both real estate and estate planning matters together to any extent necessary.
Asset Titling
One of the most common estate planning discussions that arises from a real estate purchase is the potential need for a revocable trust. Many homebuyers, especially those purchasing their first home, may not have considered how their property would pass to heirs in the future. Owning a home in their individual name can subject it to probate upon their passing, which can be time-consuming, public, and costly. Placing the home into a revocable trust ensures a seamless transition of ownership, avoiding probate and providing privacy and control over how the property is handled.
Real estate closings also highlight the importance of having a power of attorney (POA) as many sellers in particular do not feel comfortable attending the closing for any number of reasons. If an individual is unable to attend the closing due to travel, illness, or other obligations, having a trusted agent who can sign documents on their behalf can be essential. A POA grants this authority, ensuring that real estate transactions proceed smoothly even if unforeseen circumstances arise. If nominating someone you’d trust with the majority of your financial affairs in all circumstances, you would create a durable power of attorney (DPOA). But maybe you’ll simply authorize your real estate attorney to sign on your behalf for this circumstance only, which would be a Limited Power of Attorney (LPOA).
A reason to spring clean your estate plans
Selling a home, particularly one that has been owned for decades, often prompts another kind of estate planning reflection. Many homeowners realize that they haven’t updated their estate plan in years—or even decades. The individuals originally chosen to serve as executors, trustees, or guardians for minor children may no longer be the best choices. A home sale can serve as a reminder to review and update these designations to reflect current relationships and family dynamics.
The sale of a long-held family home also brings another estate planning consideration to the forefront: the evolving roles of adult children. Parents who once viewed their children solely as beneficiaries may now see them as capable of taking on greater responsibilities. Selling the family homestead can be a natural moment to update estate planning documents, designating adult children as trustees, health care agents, or power of attorney.
Additionally, real estate transactions can be a moment to address titling issues that may have been overlooked for other owned properties. For example, many times I’ve heard people mentioning they own a vacant lot or are part-owners via inheritance with siblings of a long-held family property. And more often than not, these properties are not in the owner’s primary state. These are real estate planning oversights that can inadvertently create not only a probate, but an out-of-state probate. Additionally, depending on the property scenario, questions arise around how these properties will be maintained, who will inherit them, and whether structures such as limited liability companies (LLCs), revocable trusts, or asset protection trusts should be used to facilitate management and transfer to the next generation.
Real estate and estate planning go hand in hand
Ultimately, real estate and estate planning are deeply intertwined. Whether buying or selling, these transactions offer a valuable opportunity to ensure that ownership structures, decision-making authority, and inheritance plans align with current goals and circumstances. Taking the time to review and update estate planning documents in conjunction with real estate changes ensures a smoother transition for loved ones and greater peace of mind for property owners.
