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Real Estate Tip - Keep It in The Family?




by:
Richard W. Smith
Bernstein Shur - Manchester Office

 
August 5, 2014

Previously published on July 31, 2014

Using a will to give a commercial building to a loved one, a business partner or even a charitable organization is not ideal planning. Adverse tax consequences, the public probate process and operational difficulties aside, the building may not become the property of its intended owner. Example: Sr. writes a will giving a building to Jr. but decides later that his business partner George should get title to the building. As the 1997 New Hampshire case In re Estate of Laura 141 N.H. 628, 690 A.2d 1011 discusses in detail, the application or misapplication of a legal doctrine called Dependent Relative Revocation could result in that will change being:

  • Ignored, leaving Jr. with the building
  • Read to revoke the first Will but not make a valid change, leaving all of Sr.’s heirs holding the building as tenants in common
  • Read to leave the building to George

Few building or business owners are comfortable with this level of uncertainty.  Using trusts, LLCs, and direct transfers while alive provide far more certainty as well as the opportunity for better tax and operational planning.  When deciding who should be the next owner of a building, consult lawyers familiar not only with real estate but with wealth management and planning.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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Author
 
Richard W. Smith
Practice Area
 
Real Estate
 
Bernstein Shur Overview