Learn How To Start Investing In Real Estate
Learn How To Start Investing In Real Estate

The Investor’s Guide To Estate Planning

Written by Paul Esajian


Key Takeaways

  • Estate planning is a process that arranges for your belongings to be passed on to the people you choose in the event of your own death or incapacitation.
  • Work with an attorney to guide you through an estate planning checklist so that you can leave behind helpful instructions for your loved ones.
  • Real estate investors, in particular, should take the time to create a plan for how their property assets will be distributed in the case of their own death.

When you hear the word ‘estate’, you probably don’t think about your own belongings. However, that is just what an estate is; everything you own, ranging from your checking account down to the contents of your junk drawer. Estate planning is designed to help everyone, but it also increases in importance as you begin to build more and more wealth. If you own real estate, be sure to find out why estate planning is a critical wealth management tool that ensures the legacy of your hard work is passed on to the right hands.

What Is Estate Planning?

Estate planning is the act of making arrangements for whom you want to receive your belongings after you pass on. While it might not be a fun topic, estate planning is nevertheless an important task that ensures your hard-earned assets are passed down to the right people and organizations. By making your arrangements in advance, you can leave specific instructions for which of your possessions are distributed to whom, at what time, and how. Planning your estate properly helps to minimize taxes and unnecessary legal fees that would eat into the value of what you wish to leave behind.

Will Vs Living Trust

Wills and living trusts are both tools used in estate planning. The main purpose behind both of these is to designate beneficiaries for your property in the case of your death, but each option has different applications. Many choose to keep both wills and living trusts concurrently, so as to take advantage of the different benefits.

The main distinction of a will is the option to name legal guardians for minors, which cannot be done through a living trust. A will can also instruct how outstanding taxes and debts should be resolved, including any owed to you.

A living trust, also called a revocable trust (because it can be changed at any time), ensures that your property is passed on without going through probate, and without challenges from the court. According to, the role of a probate court is to ensure that property of the deceased has been distributed rightfully, but after the deceased person’s creditors have been paid. A will becomes a public document upon the death of the individual, and property included in a will is subject to probate court and claims, which can be lengthy and expensive processes. Conversely, those with living trusts can pass down property to their beneficiaries in private, and without challenges from the court.

Estate planning checklist

Estate Planning Checklist

Estate planning may seem like an exercise that can be put off until later in life, but in reality there is no better time to do it than now. Putting together a plan now will help your loved ones to stay organized and protect them from added stress in the event of your unexpected death or disability. It’s also important to note that if you do not have estate planning trusts in place, the court system will control how your assets are distributed.

To avoid these circumstances, work with an estate planning attorney who can guide you through an estate planning checklist, such as the following:

  1. Hire an estate planning attorney––a type of lawyer who will advise you on how to best prepare your estate in the case of your possible death or disability.

  2. Specify what should happen in the case of your death, including your funeral and burial wishes.

  3. List out how to provide for your care should you become disabled.

  4. Include instructions on how the transfer of your business, and assets owned by your business, should be executed.

  5. Designate guardianship of any minors, as well as care plans for any loved ones with disabilities.

  6. Designate the beneficiaries who will receive property upon your death, including bank, savings and investment accounts.

  7. Arrange for any assets associated with title documents, such as real estate or vehicles, to be automatically transferred to a beneficiary upon your death or disability.

  8. Take out insurance policies to help cover your debts and provide for your loved ones.

  9. Obtain a last will and testament, and set up a revocable living trust so that your assets do not pass through probate court.

  10. Consider designating powers of attorney for your finances and healthcare to individuals you trust to act on your behalf.

  11. Leave helpful information for your executor, such as how to locate important documents and assets, and a list of people to notify in case of your death.

  12. Schedule routine reviews of your estate planning documents and make updates as your circumstances change over time.

[ IMPORTANT: Stay legal! Don’t wholesale a house before completing this 8-point legal compliance checklist ]

Estate Planning For Investors: Organizing Your Real Estate Assets

Estate planning is especially important for those who own real estate. When an individual does not establish a living will or trust, and their real estate assets are not designated to a beneficiary, the assets are controlled by the laws of the state.

In most states, the entire estate is typically passed through probate court and distributed to the next of kin, after all debt obligations have been resolved. Without a proper plan in place, your legacy can be whittled down to almost nothing, or passed down to the wrong hands.

Asset Planning

To organize your real estate assets, first sit down and create an inventory of each property that you own, as well as how you own it. Proceed to think about who you want those assets to go to, as well as who is next in line in case that person is no longer alive.

Next, take the necessary measures to ensure that your assets can legally be passed on to your beneficiaries. This process can get a bit more complicated for real estate investors who purchase properties with partners or through an LLC. They will need to form a plan for how to to transfer the ownership of their investments, including those with a surviving business partner.

Family Trust Vs. S-Corp

One important factor to consider when planning for your estate is whether or not to set up your assets within a family trust or an S-Corp. Even if you already have your properties under your real estate business LLC, there are many advantages to family planning with an S-Corp. From tax advantages, to ease of asset transfers, choosing an S-Corp or a family trust is something that should be weighed heavily. Read more on the topic here.

Tax Planning

Finally, one of the main purposes of putting together a strong estate plan is to minimize the tax burden on your loved ones. According to Forbes, the current federal estate and gift tax does not take effect unless you have over $5.6 million in assets, or are transferring ownership to a spouse. However, each state has its own tax structure, and individuals are subject to estate tax on any assets that exceed the exemption amount. Your estate planning attorney can help you put together a failsafe estate plan, such as taking out insurance policies that will cover any debts or taxes as assets are transferred to your beneficiaries.


According to an AARP survey, 6 in 10 American adults don’t have a will or living trust established. Avoid being a part of that statistic by getting started with your estate planning today. As an investor, it is imperative that you have the peace of mind that your assets and family are protected, come any circumstance. As author Alan Lakein once said, “planning is bringing the future into the present so that you can do something about it now.” There is no better time than the present to create an inventory of your assets and ensure that your legacy will be passed down for generations.

Are there any other estate planning tips we missed? Feel free to share your thoughts in the comments below.