Protect Your Home’s Future: Smart Estate Planning for Homeowners

Your home is likely your most valuable asset — not just financially, but emotionally. It's where memories are made, families grow and dreams take shape. Yet many homeowners overlook a crucial aspect of homeownership: ensuring their property passes smoothly to their loved ones. Whether you're a first-time homeowner or have owned multiple properties, understanding the basics of estate planning can save your family significant time, money and stress in the future.
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The Basics of Property Transfer in Estate Planning

When it comes to passing on your property, having the right legal tools in place makes all the difference. Let's explore the key elements that every homeowner should understand.

​Wills vs. Trusts: What's the Difference? 
​A will is often considered the foundation of estate planning. It's a legal document that specifies how you want your assets —  including your home —  distributed after your death. However, property passed through a will typically must go through probate —  a court-supervised process that can be time-consuming and expensive.

Trusts, on the other hand, offer more flexibility and privacy. Unlike wills, trusts can help your beneficiaries avoid the probate process entirely. A trust can be thought of as a special container that holds and manages your assets. When you place your home in a trust, you're ensuring a smoother transition to your beneficiaries while maintaining control during your lifetime.

The Probate Process: Why It Matters 
Many homeowners don't realize that probate can significantly impact their family's ability to access or sell inherited property. During probate, your home essentially gets "locked" in the court system while:

• The court validates your will
• Creditors are notified and given time to make claims
• Assets are inventoried and appraised
• Various legal and court fees accumulate

This process often takes months or even years, during which your beneficiaries may face challenges maintaining the property or making necessary decisions about its future.

What Is a Transfer on Death Deed (TODD)?

One of the most straightforward tools for passing on your property is a transfer on death deed (TODD). This relatively new legal instrument works similarly to a beneficiary designation on a bank account or life insurance policy, but for real estate. It's gaining popularity among homeowners who want a simple, cost-effective way to transfer property while avoiding probate.

​How a TODD Works
​A TODD allows you to name one or more beneficiaries who will receive your property automatically upon your death. The key benefits include:

• You retain complete ownership and control of your property during your lifetime
• You can sell, refinance, or make changes to the property as needed
• The transfer happens automatically at death, without probate
• You can change or revoke the TODD at any time before death

Essentially, the beneficiary will “step into your shoes” at the time of your death. They take the property, along with the mortgage, liens and judgments or other claims attached to it. 

The Tax Implications You Need to Know

Here's a critical point many don't realize: how and when you transfer property can significantly impact your family's tax burden. For instance, when parents transfer their home directly to children during their lifetime, the children inherit the parents' tax basis in the property, potentially leading to significant capital gains taxes when they eventually sell.

Consider this example: Your parents bought their home in 1985 for $100,000, and it's now worth $500,000. If they give you the house while they're alive, you inherit their $100,000 tax basis. When you sell, you could owe capital gains tax on $400,000 of appreciation. However, if you inherit the house through a living trust after their passing, you receive a "stepped-up" basis to the property's value at the date of death, potentially saving tens of thousands in taxes.
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Minnesota Estate Planning

Local laws and regulations play an important role in how your property will be handled, affecting everything from tax implications to probate procedures. Fortunately, Minnesota offers several tools to help homeowners protect their property and ensure a smooth transition to their loved ones, including TODDs and streamlined probate processes. 

The probate process in Minnesota typically takes 12-18 months, though this timeline can vary depending on the estate's complexity and whether any disputes arise. This length of time —  during which the property may be effectively frozen — is one reason many Minnesota homeowners choose to explore probate avoidance strategies. Working with local professionals who understand Minnesota's specific requirements can help you navigate these choices and create an estate plan that works for you and your family.
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Smart Planning Strategies: Making the Right Choice

When it comes to estate planning for your home, there's no one-size-fits-all solution. The best approach depends on your unique situation, family dynamics, and long-term goals. 

​Working With the Right Team
Estate planning is about more than just legal documents. It should encompass a broad strategy that protects your property and your loved ones. Consider working with: 

• An experienced estate planning attorney who understands local property laws
• A financial advisor who can help evaluate tax implications
• Real estate professionals like Sheri Wessel and Melany Thelander, who can provide insight into your home’s current and future value

Timing Matters 
The best time to start estate planning is now, even if you think it's too early. Having a plan in place provides peace of mind and can be updated as circumstances change. Consider reviewing your estate plan:

• After major life events (marriage, divorce, births, deaths)
• When there are significant changes in property value
• At least every three to five years to ensure it still meets your needs
• When tax laws change

Common Mistakes to Avoid 
Through years of working with homeowners, we've seen several pitfalls that can cause problems for families:

• Failing to update beneficiary designations after life changes
• Not considering the tax implications of property transfers
• Assuming joint ownership solves all problems
• Waiting too long to start planning
• Not informing family members about the existence of estate planning documents

Some situations may also require more careful planning, such as when children from previous marriages, properties with multiple owners and investment properties are involved. In these cases, working with experienced professionals who understand estate planning becomes especially important to ensure your legacy is protected exactly as you intend.
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Interested in Learning More? Contact Us

If you're considering your estate planning options or have questions about property transfers, Golden Homes Group MN is here to help. Our experienced team can connect you with trusted estate planning professionals and guide you through the real estate aspects of protecting your family's future. Contact us today to get started!

Sheri Wessel 
Office: 651-379-5252
Mobile: 651-270-7157 
Email: [email protected]

Melaney Thelander 
Office: 651-379-5252 
Mobile: 651-500-8789 
Email: [email protected]