What is a devise in my estate plan?

A real estate devise refers to the transfer of real property through a will upon the death of the property owner. This legal term is commonly used in estate planning to specify how a decedent’s real estate is distributed to beneficiaries. Unlike personal property bequests, which can include money or possessions, a devise strictly pertains to real estate assets.

Key elements of a real estate devise:

• Legal ownership transfer: In a devise, ownership of assets passes from the deceased to the designated heir(s) according to the terms stipulated in the will. This ensures that assets are distributed according to the deceased’s wishes, provides clarity, and reduces the possibility of disputes.
• Specific or residuary nature: A real estate devise can be either specific or residuary. A specific devise names a particular piece of property to be given to a certain beneficiary, such as a family home or a vacation property. On the other hand, a residuary devise includes any remaining property not explicitly mentioned in the will. This is useful in ensuring that all assets are accounted for and distributed fairly.
• Subject to estate debts and taxes: Before the beneficiary can assume full ownership, the property may be subject to the deceased’s outstanding debts and taxes. Estate executors are responsible for settling these obligations, which may involve selling the property if necessary.
• Legal Documentation and Probate Process: They will generally undergo a probate process to validate the transfer of a real estate devise. During probate, the court verifies the authenticity of the will, supervises the settlement of debts and taxes, and ensures the property is transferred according to the legal terms.
• Rights and Responsibilities of Beneficiaries: Beneficiaries of a real estate devise acquire not only ownership but also responsibilities such as property maintenance, taxes, and potential mortgage payments. Proper planning and legal guidance can help mitigate challenges and ensure a smooth transition of property ownership.

Real estate devise vs bequest

Many people confuse real estate devise and bequest, as both refer to asset distribution in a will. However, there is a key distinction:

• Devise: A gift of real property, such as land or a house.
• Bequest: A gift of personal property, including cash, jewelry, or stocks.

A will may include both devises and bequests, ensuring all assets are properly allocated according to the testator’s wishes.

Types of real estate devices in planning

When writing a will, one should understand the different types of devises to ensure real estate properties are passed according to the testator’s wishes. Each type of devise has a purpose, and it provides certainty in estate planning with minimal possibility of legal controversy.

1. Specific real estate devise

A specific devise refers to the transfer of a particular piece of real estate to a designated beneficiary. This type of devise is precise, ensuring that the named property is passed on exactly as the testator intended.

• Example: “I devise my beachfront property to my daughter, Sarah.”
• Importance:
  • Ensures the intended beneficiary receives the exact property.
  • Reduces ambiguity in property distribution.
  • Can create issues if the property is no longer in the estate at the time of death (known as ademption).

2. General Devise

A general devise is a gift of realty not limited to one specific property but rather springs from the aggregate of the assets in the estate. It is nonspecific like a specific devise, which states a definite piece of land.

• Example: “I leave a house worth $500,000 to my son, Michael.”
• Importance:
  • Allows flexibility in asset distribution.
  • Ensures beneficiaries receive value even if a particular property is not available.
  • The executor may need to liquidate estate assets to fulfill the devise.

3. Demonstrative Devise

A demonstrative devise in real estate is a combination arrangement that conveys property from a specific source, usually linking the gift to the proceeds of sale of another property. This guarantees that the desired value is obtained even if the original property is lost.

• Example: “I devise $300,000 from the sale of my rental property to my nephew, John.”
• Importance:
  • Provides financial security to the beneficiary even if the original asset is sold.
  • Helps avoid ademption issues (where a specific asset is missing from the estate).
  • May require the executor to oversee property sales to satisfy the devise.

4. Residuary Devise

A residuary devise is real property that is not mentioned specifically in the will but is part of the residual estate assets. This includes all property, even if it was not specifically addressed in the will.

• Example: “I leave the remainder of my estate, including any real property not specifically devised, to my spouse.”
• Importance:
  • Prevents intestacy (where assets are distributed according to state law rather than the testator’s wishes).
  • Provides a catch-all provision for real estate and other assets.
  • Can lead to disputes if not clearly defined, especially if multiple heirs have claims.

Does a devise of residue include real estate?

A residuary clause in a will accounts for remaining assets after specific gifts have been allocated. Whether it includes real estate depends on the wording of the will:

• If the clause explicitly states “all remaining real and personal property,” then real estate is included.
• If real estate is omitted or addressed separately, the residuary devise may only apply to personal assets.

An estate planning attorney can help draft a will that clearly defines the testator’s intent regarding residual real estate.

Do you pay taxes on devised real estate?

Receiving a devised property may come with tax obligations depending on the jurisdiction and estate size:

• Estate taxes: Large estates may be subject to federal and state estate taxes before the property is transferred.
• Inheritance taxes: Some states impose an inheritance tax on beneficiaries.
• Capital gains taxes: If the beneficiary later sells the devised real estate, capital gains tax may apply based on the stepped-up basis.

Proper estate planning can help minimize tax burdens for heirs.

Ensuring a valid real estate devise

For a devise to be legally valid, the will must meet certain legal conditions:

• Proper execution: Signed and witnessed as required by state law.
• Clear identification: Property and beneficiaries shall be identified clearly.
• Free from duress: The testator ought to make decisions without the force of coercion.

A well-drafted estate plan ensures that an enforceable will divest a decedent’s property, particularly real property, in accordance with their desire to prevent disputes between heirs.

Summing-up

A real estate devise is an integral part of estate planning since it guarantees that real property is left to the testator’s desired beneficiary. An understanding of the different devises, taxation, and statutory regulations will guide individuals in making a well-informed decision when writing a will. A consultation with an estate planning attorney will clear up any issues and guarantee that the estate plan is legally sound.