Daddy, Can I Have An Apartment In The City?
One of the joys of having some success in life is your ability to do things for people you love — probably your children, first of all. For some New Jersey parents, that might include the ability to buy an apartment in the City (New York City) for their kids.
What, you may be wondering, does that have to do with estate planning?
(Although I warn you that I plan to blog periodically on matters that have very little to do with my legal specialty.)
A recent article in The New York Times points out some of the issues and gets many of the estate planning principles correct. (I would expect the NY Times to get that much right and they even used the words “family trust”.) The article spends a lot of time talking about issues related to passing co-op board interviews, and how to make sure that the other children are taken into account if the property is just for one of them.
The writer didn’t go into, however, any of the issues of whether a step-up in basis was preferable to a carry-over basis in the property if you title it in joint name between the parents and kids….but, then again, that doesn’t make for compelling reading, evidenced by the fact that your eyes likely rolled back into your head the moment I mentioned “basis.”
In fact, if you understand any part of what I just said, please call my office, I might have a job for you.
One thing the Times article got exactly right was its clear support for involving legal counsel before you engage in the real estate transaction. I can’t tell you how many times I’ve told clients, prospective clients, and planning partners that when they bring me an issue early, I have many more options than if they bring me an issue after decisions have been made. I try to encourage that kind of proactive attorney involvement by not charging clients in my Client Family Program for phone calls or strategic planning meetings. I figure that if I can take the cost element out of the occasion, then it’s easier for clients or their advisors to pick up the phone.
I did think they could have spared a few words about whether or not to leave the apartment to their kids as an outright distribution. There are some situations in which an outright distribution is a good choice, but many other times there are tremendous advantages to leaving the property protected from future ex-spouses, creditors, or as a means to protect vulnerable children from themselves. Whether or not that’s the right decision can be determined in a legal counseling session with a well-trained estate planning attorney, but I think it should have been mentioned in the article.
In any event, mark the day! Estate planning has gone mainstream and landed squarely on the front page of the Real Estate section of the New York Times – Sunday Edition!
Next: Estate Planning! The Musical.
Posted by Victor J. Medina, managing attorney
The New Jersey Estate Planning Center
Medina Law Group