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How Remodeling Your Home Could Impact Your Estate Plan

Posted by Gregory Robinson | May 16, 2023 | 0 Comments

Spring is associated with renewal, and as the weather gets warmer, many homeowners turn their attention to renovation projects.

Each May, the home remodeling industry and the National Association of Home Builders (NAHB) celebrate National Home Remodeling Month. In 2023, over 17 million home remodeling projects are expected to be undertaken in the United States.

Between planning, permitting, and construction, the home remodeling process can take months to complete. But even after the finishing touches have been applied, there may still be work to do. If the home is part of an estate plan, a remodel can affect that plan and require changes to it. To keep your estate plan up to date, make sure to discuss a home remodeling project with an attorney.

Remodeling Market Remains Strong

The home remodeling market has shown tremendous growth. From 2007 to 2022, US remodeling activity increased 65.9 percent.[1] The remodeling market slowed at the start of the pandemic in early 2020 but has come back strong, despite rising material costs and labor shortages.

Homeowners flush with cash from increased home values have been a major driver of the billions spent on improvement projects.[2] While high home equity levels should sustain remodeling activity for the next few years, decreases could occur due to falling home prices, inflation, and the probability of a recession.

The number of remodeling projects is expected to decrease from 17.7 million in 2022 to 17.3 million in 2023. Nevertheless, the United States spends hundreds of billions per year on home improvement. From 2019 to 2021, Americans spent $624 billion on nearly 135 million home improvement projects—an increase of $300 billion and 94 million projects compared to 2013.[3]

As the housing market slows, more homeowners plan to invest in improvement projects to make their homes more comfortable and enjoyable, as opposed to making them more attractive to prospective buyers. Home improvement spending averages around $7,750 to $8,500.[4] The most common remodeling projects involve the bathroom, kitchen, living room, and primary bedroom.

When it comes to home improvement project funding, cash from savings pays for most projects under $5,000. Pricier projects are more likely to be funded by a home equity loan, cash from home refinancing, an insurance settlement, or contractor financing.

Home Improvement Estate Planning Considerations

Different generations spend differently on home renovations. Millennials, for example, tend to focus on projects around family formation and favor a do-it-yourself approach. Baby Boomers and the Silent Generation, on the other hand, prioritize projects that make the home more livable as they age and are more likely to hire a professional contractor.

There are also generational differences in estate planning. Although 60 percent of US adults have no estate plan, 81 percent of people aged seventy-two or older and 58 percent of those ages fifty-three through seventy-one have estate planning documents.[5]

A home is the largest purchase that most people ever make. For the average American, home equity accounts for around 65 to 70 percent of their net worth. The home should therefore feature prominently in any estate plan. Home remodeling can necessitate estate plan changes, however. Here are a few estate planning considerations to keep in mind when remodeling a home.

Remodeling a Home in a Trust with a Home Equity Loan

Homeowners may place their property in a revocable living trust (i.e., a living trust) to avoid probate. Placing property in a trust makes the trust the legal owner of the property, which requires drafting a new deed in the trust's name.

A home equity loan (also known as a second mortgage) allows homeowners to borrow money using the equity in their home as collateral. A home equity loan is dispersed in a lump sum and paid back in monthly installments. This type of loan is often used to pay for big expenses, such as a home improvement project.

Some lenders prefer to only extend a home equity line of credit to a person—not a trust. Depending on the bank, this could mean taking a property held in trust out of the trust and deeding it back to the homeowner. The property can be transferred back into the trust when the loan is secured; the homeowner does not have to wait until the loan is repaid. If you deed your home out of the trust and back to you, make sure that the home gets transferred back to the trust if you want to avoid probate.

Increasing a Home's Value and Beneficiaries

Remodels are not a great way to make money. The return on investment for remodeling projects ranges from 54 percent to 87 percent.[6] But depending on the neighborhood, region, market, and project expense, home improvement can significantly increase a property's value, especially over time, since home prices increase about 5 percent a year.

Median home prices have risen dramatically over the years, from just under $18,000 in 1963 to more than $467,000 in 2022.[7] Record growth in home prices during the pandemic accelerated this trend, and while median prices are declining in some markets, they mostly remain above pre-pandemic levels.

With or without major renovations, a home purchased years ago is likely to have appreciated over time. In certain areas, homes purchased in 2000 appreciated over 200 percent. Average prices in San Francisco, for example, have increased from $364,000 to $1.12 million since 2000.[8]

Home value changes may affect a homeowner's estate plan. If leaving the property to a specific person and wanting to treat beneficiaries equally, an estate plan may need to be refigured to equalize each beneficiary's inheritance. One option to do this is to leave the home to more than one person; however, care must be taken to avoid conflict among multiple beneficiaries. The estate plan should stipulate how the home will be co-owned and provide a plan for the recipients to sell their interests in it.

Balancing Homeowner Needs and Legacy

Older adults have a strong preference for growing old in their current homes. Ninety-percent of respondents told AARP that they want to “age in place.”[9] At the same time, nearly 50 percent said they have not considered the changes their home may need to accommodate them as they age.

Remodeling projects specific to aging in place average less than $10,000, but they can cost up to $40,000 or more.[10] Because older adults tend to have more equity in their homes and more savings, an aging-in-place project may be affordable, but unless paying cash for a project, it also may entail taking out a loan.

Any debt that outlives a person needs to be paid during estate or trust administration. Creditors have preference over most heirs, and every dollar that goes to paying back a loan is one less dollar that goes to a beneficiary. While aging in place usually costs less than a nursing home, having less cash on hand or added debt can impact estate planning goals.

Revising Your Estate Plan After Home Improvement

Americans renovate their homes around every three to five years. This is the same time interval that attorneys recommend reviewing an estate plan.

Once you have finished remodeling your home, you should consider remodeling your estate plan. In addition to home improvements, there may have been other life events in recent years that warrant an estate plan update. Making changes to your plan does not cost much, and you will buy peace of mind knowing your plan reflects your current wishes.

To discuss revisions to your estate plan, contact our office and schedule an appointment.

[1] Vincent Salandro, Remodeling Activity Likely to Drop in 2023, Remodeling by JLC (Dec. 18, 2022),

[2] Market Measure, The Industry's Annual Report, Hardware Retailing p. 26, 27 (Jan. 2022),

[3] Elizabeth Renter, 2022 Home Improvement Report, NerdWallet (Nov. 16, 2022),

[4] State of Home Spending, Angi, (last visited Apr. 10, 2023).

[5] Haven't Done A Will Yet? You've got company. Neither have 6 in 10 U.S. adults, AARP (Feb. 24, 2017),

[6] Carl Vogel, Home Renovations with the Best Return on Investment, This Old House, (last visited Apr. 10, 2023).

[7] Median Sales Price of Houses Sold for the United States (MSPUS), FRED Economic Data, Federal Reserve Bank of St. Louis, (last visited Apr. 10, 2023).

[8] Nick Routley, Charting 20 Years of Home Price Changes in Every U.S. City, Visual Capitalist (Oct. 22, 2020),

[9] Kristen Dalli, Most older adults want to grow old in their current homes, study finds, Consumer Affairs (last visited Apr. 10, 2023).

[10] Jonathan Trout, The Cost of Aging in Place Remodeling, RetirementLiving (Mar. 15, 2023),

About the Author

Gregory Robinson

Attorney Gregory Robinson is a native of Alabama. He earned his Juris Doctor (J.D.) degree from Mitchell Hamline School of Law and holds a Master of Business Administration (MBA) degree from Rice University. Prior to practicing law, he worked as a strategy consultant in the financial industry...


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