Estate planning and financial planning strategies often shift based on major changes in your life, such as a marriage, divorce, birth of a new child, or other significant circumstances. The passage of the new federal laws surrounding estate taxes and gifting may lead you to go back to the drawing board about your home equity loan.
Since you’ll no longer be able to deduct the interest on your home equity loan or your line of credit, if you use the money for any reason other than improving your dwelling or purchasing it, it is costing you more money to have this debt located on your balance sheet. This calls for an updated strategy session with your experienced estate planning attorney and financial planner. You will want to view paying off your home equity loan in the context of your overall finances and not just the individual tax implications.
There are many different things to consider such as other debts you may currently have listed on your balance sheet. Paying off the home early could make it much easier to transfer onto future generations if you intend to give this to one of your loved ones when you pass away. The decision about family homes and vacation properties can be especially difficult to include in your estate plan if you have numerous children and you are not sure where you want the asset to go. Sitting down and thinking carefully about your goals and the individuals who may inherit this money can help you.
