I'm wondering what I can do to ensure my relatives will inherit my co-op. Is it smart to put the co-op in a trust?
Ensuring a co-op is passed down to a relative after your death can be a bit more complicated than a condo, because co-op owners are technically shareholders. This means you need to follow the building's rules for succession.
"Co-op proprietary leases often have provisions for succession on death," says Rob Steele, head of the trusts and estates practice in the law firm of Schwartz Sladkus Reich Greenberg Atlas. "Most allow transfer to a spouse without board approval." The requirements for passing on property to children are less strict than if you were to leave the apartment to other relatives, he says, recommending you check your proprietary lease for the exact rules.
In the event that you want to leave your apartment to someone other than the relatives specified by your proprietary lease—say, a friend or a more distant family member—you may need to appeal to the board for approval. This will likely involve an application process and interview for that successor, according to the Cooperator.
Given the complicated nature of this, it will be helpful to your family if you create a trust.
"Most co-ops today permit trust ownership, even if not specifically mentioned in the proprietary lease or by-laws," Steele says. "If this is allowed, it will make the administration of your estate easier for your heirs."
However, even with a trust, passing down the apartment to a more distant relative or friend will not be so easy.
"If board approval is needed for a transfer to children or other beneficiaries, that will not change," Steele says. "They will still need to apply to the board at that time and they will not be guaranteed occupancy. If the trust sells the apartment, the proceeds will pass to your heirs without probate, and that will make it easier for them."
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