When you’re setting up your estate for your children or other heirs to inherit, what you don’t know about property can cost the people you care about a lot of money. One of the key areas of confusion when looking at your assets is the difference between real property and personal property. Each of these categories should be handled differently to maximize the amount of value that’s transferred to your heirs at your death and to minimize the state and federal taxes on your estate. A good estate planning attorney can help you make these plans, but it’s a good idea to understand the basics.
What is real property and what is personal property?
Real property (aka realty or real estate) is anything that is attached to land. This includes homes, out buildings and commercial property as well as the land itself. Plants and trees are considered real property if they don’t require cultivation. (So, an apple orchard is real property, while a field of grain is not.)
Personal property, as used by an elder law attorney in Massachusetts, is everything that is NOT real property. This includes everything from your clothes to your furniture to your car to your bank account. This category is often further divided into chattels and intangibles. Chattels are physical things, such as your watch or your television set, whereas intangibles are paper assets, such as your bank account, your 401k account and any stocks or bonds you may own.
Each of these categories of property requires special handling to maximize the value of your estate. To learn more about planning your estate, contact one of our elder law attorneys today.