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Real Estate Allocation When Aging
People who are wise with their property and asset management can make owning properties more lucrative not only for them but also for the generations that come after them. This includes being aware of the tax strategies that come with selling rental properties if you decide you don’t want those properties yourself anymore. Some of these strategies to avoid extra taxes in a system that was set up to tax to maximum on every transaction done include things like providing heirs with a stepped-up basis.

For example, if someone leaves real estate to someone who is elderly and that person is to get dementia or some other long-term illness and be left to go to a facility they will wipe out the person’s entire estate and sell all the property before the government will start to help pay for the persons’ expenses. This leaves anyone who was to get the property from that person with nothing. There are ways to allocate your property, however, to avoid having this happen to you.
If you are an individual who is aging it may be time to allocate your property out to others you trust and love. It’s never too early to learn about the laws in your area and do some early estate planning of your own. That’s the best gift you can give your family peace of mind knowing that your estates are taken care of and that their gift won’t be absconded by the government in lieu of your care as you age.

If you technically don’t OWN the property (but a loved one, family member, or trusted friend does) it’s much harder for the state to come take that asset away from you. It’s essentially putting up a “barrier” that blocks the government from taking what is not theirs. Long as you trust the person who is taking the property and keeping it in their name there should be no issues over losing that investment should you never need the money yourself.

Sometimes spreading out assets over several different trusted people can also come with other benefits like avoiding higher tax brackets if you were to hold all the assets all by yourself. Think of it all as a big bucket, and you want to put your properties and investments in several buckets rather than all in one big one that you keep to yourself.
This also avoids the problem of people aging and not wanting to manage the property anymore. Sometimes they sell it to just get it “off their hands”. This can lead to quick sales that undervalue the properties. This can lead to massive amounts of wealth and money being lost. The best way to avoid this problem is to change your 1031 exchange to a REIT (real estate investment trust). You can then rest at ease having an updated plan, and your family can know that the family assets are protected and safe from being taken if you were to end up ill or require extensive medical care or other aid later in life.