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Turnkey Real Estate Investing

4 min read

How to Seamlessly Integrate Investment Properties Into Estate Planning

Tue, Jun 20, 2023

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Passive investors often have their sights set on the future. Investing in real estate isn’t just about current cash flow, but establishing lasting, generational wealth. Ensuring your hard work lives on and continues to benefit your family demands forethought.

Including investment properties in estate planning requires careful consideration and strategic decision-making. After all, you want to minimize potential headaches and snafus for your heirs! Here are some steps you can take to wisely include investment properties in your estate plan.

Follow These Steps to Add Investment Properties to Your Estate Planning

Step 1: Evaluate your investment properties

First things first, you’ll want to take total stock of your assets. Because these details will change over time, revisit these details with some regularity. Assess the value, income potential, and tax implications of each investment property you own. Consider location, market conditions, rental income, and potential for appreciation. A realistic picture of what you have will simplify the process.

Regarding estate planning, property location matters insofar as tax implications and which probate court, if required, your assets will funnel through.

Step 2: Determine your objectives

Clarify your goals for the properties in your estate plan. Typical objectives are preserving wealth for future generations, minimizing estate taxes, ensuring a smooth transition, or providing ongoing income for beneficiaries. Decide your priorities so your estate planning professional can help you achieve the proper structure and method. What’s most important to you, and what will matter to your beneficiaries?

Step 3: Consult the professionals

It’s never wise to deal with wills, assets, or estate planning without the help of a qualified professional. This process has plenty of nuances, and your choices can make things complicated and potentially fruitless for your heirs. Seek advice from qualified professionals, such as estate planning attorneys, financial advisors, and accountants, who can help you navigate the legal and financial aspects of the process.

Those with experience working with real estate investors are a must!

Step 4: Consider ownership structures

You don’t want to leave any details in question. Your ownership structure can help or hinder your beneficiaries, so choose wisely. Explore various ownership structures for your investment properties, such as individual ownership, joint tenancy, tenancy in common, or placing them in a trust. Each option has different implications for asset protection, taxes, and distribution upon your passing.

For example, placing an investment property in a trust typically means your heirs can avoid probate.

Step 5: Create a will or trust

Draft a comprehensive estate planning document, such as a will or trust, that clearly outlines your wishes regarding the distribution and management of your investment properties. Specify who should inherit each property, how it should be managed, and any conditions or restrictions you want to impose.

For your part, focus on getting your wishes down. Your attorney or estate planner can worry about the legalese and wording to make an airtight will and testament.

Step 6: Plan for liquid needs

Estate planning involving investment properties should also address the potential liquidity needs of your estate. Suppose the value of your investment properties constitutes a significant portion of your estate. In that case, planning for sufficient cash or other liquid assets to cover expenses, debts, or taxes may be necessary. You want your investment properties to be a benefit, not a burden, upon your passing.

Step 7: Consider tax implications

Understand the tax consequences associated with transferring investment properties to your beneficiaries. Consult with a tax professional to optimize tax efficiency and explore strategies like gifting, 1031 exchanges, or establishing a family-limited partnership. Each option accomplishes different goals, but you want to position yourself (and your heirs) in the most tax-advantaged way possible.

Step 8: Communicate with beneficiaries

Clearly communicate your estate plan and intentions regarding the investment properties to your beneficiaries. Openly discuss any expectations, responsibilities, or potential issues to minimize misunderstandings and conflicts in the future. Don’t blindside someone with inherited assets that carry a lot of responsibilities. There should be an ongoing conversation, particularly if you sell, exchange, or acquire other assets.

Step 8: Review and update regularly 

Regularly review and update your estate plan to reflect any changes in your investment properties, family circumstances, or tax laws. Ensuring your will remains aligned with your goals and the current legal and financial landscape is essential. What you think is best now may not be what’s best in the future. Remember, wills are not a “set it and forget it” one-time deal. They’re critical, ongoing projects that should grow and change as you do.


Remember, estate planning is a complex process, and the guidance of professionals is crucial. Each individual’s situation is unique, so it’s essential to tailor your estate plan to your specific needs and consult with experts who can provide personalized advice based on your circumstances. As a real estate investor, it’s up to you to think about where your investment portfolio will be when you’re gone!


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Chris Clothier
Written by Chris Clothier

Entrepreneur, writer, speaker, ultra-endurance athlete, husband & father of five beautiful children. Chris puts these natural talents on display every day. As a partner at REI Nation, Chris addresses small and large audiences of real estate investors and business professionals nationwide several times each year. Chris is also an active writer, weekly publishing real estate, leadership, and endurance training articles.