Someone’s real property is often their most valuable asset. They may make payments for years and feel a sense of pride about their home. The entire family may have an emotional attachment to someone’s home because of the memories created there.
Parents who are thinking about the legacy they will leave behind when they die will often specifically bequeath their real property to their children. The appropriate way to transfer an interest in real property differs depending on the kind of property someone owns. For example, those living in a residential co-op may try to leave their residence for their children, which will result in specific considerations unique to a co-op lifestyle.
What will that mean for children named as beneficiaries?
Co-ops are different than traditional real property. Pennsylvania recognizes cooperative housing as a valid way to keep residents invested in a community while controlling housing costs. In a co-op, each resident typically buys an interest in the property or the company that owns the property, but that interest only gives them the right to rent one of the units. They pay a monthly rental fee and often co-op administration fees each month. There will never be a point at which they fully own their unit. This arrangement obviously has implications for the heirs or beneficiaries of a co-op owner.
A parent can potentially transfer their interest in the community and their right to rent a unit to their children in an estate plan, but any transfer of possession will still require review by the association running the co-op. Individuals who do not meet financial standards or who fail background checks may not be able to take possession of a co-op property.
Unusual assets may complicate estate planning and probate
Finding an appropriate way to handle someone’s most valuable assets can be a challenge. Those who live in a co-op and want to put together an estate plan may need to consult with an attorney about how to facilitate that transfer effectively. Those left an interest in a co-op in someone’s will may need assistance making use of that bequest.