Owning Real Estate in the United States: Think of Your Heirs

There are several strategies and structures for property holdings in the United States, each with its own legal consequences.

Every year, as winter approaches, thousands of Quebeckers head south to Florida. Encouraged by the sun and high temperatures, many of them have purchased property there. However, before making this dream a reality, estate planning should be considered. Settling an estate following death or disability can be both costly and time-consuming.

In Québec, you can avoid court probate proceedings by preparing a notarized will. However, the reality in Florida is different and you may require a probated will from the US Court.

Avoid the probate process

These legal proceedings allow the US courts to validate and authorize the transfer of property to heirs as per the deceased person’s last wishes. In addition to generating fees as high as 3% of the estate’s belongings, selling the property to a third party or transferring it to heirs can take between 9 and 15 months.

The various ownership models

There are several possible ownership models that can help you to circumvent these costs and complications. Here are a few examples:

Revocable trust in Florida

This simple and flexible option facilitates the transfer of the property to heirs by avoiding the probate process. The trust can be modified at any time and adapted to family changes such as children reaching the age of majority or the creation of a blended family. It gives the owner total control, which includes the ability to sell in the event of incapacity without involving the US Courts. The trust can hold several properties in Florida.

The fees payable for setting up a revocable trust are generally lower than those required for probate proceedings. Please note that a T3 Trust Income Tax and Information Return must now be filed with the Canada Revenue Agency.

Joint ownership with a right of survivorship or by married persons

This planning option allows for the automatic transfer of the property to the surviving spouse or co-owner without having to go through the probate process. However, probate cannot be avoided following the death of the spouse or co-owner. This must be explicitly provided for in the property title.

Lady Bird Deed (Enhanced Life Estate Deed)

This option simplifies the transfer of the property to heirs while maintaining the owner’s control by adding the potential beneficiaries to the property title. However, making changes over the years can be difficult. It is not recommended where there are minor beneficiaries or blended families.

Property held by a corporation

Property held by a corporation is rarely recommended where the owner has personal use of the property since there is a taxable benefit for the shareholder. However, this model could be useful where the property is leased.

Planning for profit

Effective planning following the purchase of a real estate property or other assets in the US is required in order to avoid extra costs and undue delays. If you’re an owner who hasn’t taken the necessary steps yet, it’s not too late to act wisely.

By calling on an expert in international taxation who specializes in cross-border estate planning, you can ensure your loved ones will be free of worries.