LEAVING A HOME TO YOUR CHILDREN: THINGS TO CONSIDER
July 10, 2020
Real estate is often among the most valuable assets we own. A house purchased a few decades ago may have ballooned in value, making it worth far more than you could have ever imagined. The question is: What should you do with it long-term?
Many older adults want to leverage this prized possession to help their children. But doing so is often more complicated than it appears.
What do the kids want?
Step one is to talk to your children about the home. It’s important to gauge their interest level in the property, and what they hope to do with it. Knowing their goals can help you shape your plans and help prevent nasty squabbles.
For example, if each child is left an equal interest in the home, that means they must all decide together what to do. So what happens if there is an argument about someone moving into the house? Or maybe one sibling wants to use it as a business property, and the others want to sell the home and split the profits. An heir with serious debts and hungry creditors might also result in the property being vulnerable.
By resolving these issues ahead of time, you can make sure things go smoothly with the home in the future.
Options for passing a home to children
If, after speaking with your children, you would like to pass your home to one or more of them, there are a variety of methods for doing so.
One such option is a will. This works best when all the heirs agree on the future use of the property. Keep in mind, using a will means the home will have to go through the probate process, which can be time-consuming and comes with some expenses.
Another option is to use a trust. While creating a trust may cost a little money upfront, as it requires the assistance of a lawyer, there are benefits. The property likely won’t be subject to probate, and you can maintain a precise level of control over the home’s fate. There are many potential trusts to consider.
Passing a treasured home to the next generation is rarely a simple process. Not only are there emotional aspects to consider, but the legal process requires delicate planning and careful wording. Tax obligations should also be accounted for.
With a proactive approach, however, it’s possible to ensure things go as smoothly as possible.