Co-operatives and condominiums in estate plans: Know the facts

As someone who may become a beneficiary, it's important that you understand the basics of receiving an inheritance. The last thing any family should have to go through is a feud to determine who receives which assets from a loved one's estate.

If you may receive a condo or co-operative, it's a good idea to know how those assets have to be handled. Condos are real estate, so if your loved one doesn't transfer the real estate out of his or her name, then an executor has to be appointed to determine the transfer of property. Co-ops, on the other hand, allow the transfer of the property to spouses, but other family members or children might not be allowed to inherit the property without the co-op board approving of the inheritance.

In the case that an inherited co-op has a new owner who is not accepted by the co-op board, then the home will have to be sold. To avoid this, your loved one should have the beneficiary approved ahead of his or her death or at any point when the property is willed to the beneficiary.

Preserving an estate's assets is important, so understanding these fine differences in how condos and co-operatives are treated is important. Additionally, the beneficiary needs to know about the different fines or fees he or she is meant to pay for these properties, so he or she is not in violation of the terms of the Homeowner's Association or co-operative.

If you are a beneficiary or are planning to leave a co-operative or condo to a loved one, it's wise to talk to one another in advance and to create a plan. That way, there are no surprises in the future.

Source: The Cooperator New York, "Understanding Rights of Inheritance," Liz Lent, Oct. 01, 2017

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