Home Sweet Home
For most of us, our home is our biggest investment and our most valuable asset. But, a home is more than just a number on a ledger sheet. Within the walls of our homes, our families have lived, loved and learned the lessons of life. Seniors frequently want to leave their homes to their families.
When is the best time to transfer the home to the family: during life or after death? Each transfer has specific rules and consequences that are important to understand. Today’s Tip will discuss life-time transfers; Augusts’ tip will discuss transfers that take place after death.
A recorded gift deed will transfer the title of your home to your family. The following are some of the consequences of transferring your home during your lifetime:
ADVANTAGES:
- Your family will not have to file for probate to obtain the title to your home.
DISADVANTAGES:
- Once your children own the property, they are in complete control—they can sell or mortgage your property without your permission.
- If your children are faced with bankruptcy or divorce, your home could be used to satisfy their creditors or be divided in their divorce.
- You will lose your homestead exemption, and your property taxes will increase.
- After gifting your home, you will be ineligible for Medicaid for 5 years unless your children reconvey your home back to you.
- When your family sells your home after you are gone, they will have to pay capital gains tax. If your property has appreciated in value, this tax could be substantial.
Wills, trusts and nonprobate transfers are used to transfer a home after death. The consequences of using these methods will be the subject of our next Senior Tip.
The content here is not intended to be legal advice. If you have a specific question, you should consult with an attorney.
Tom Packer is an Elder Care Attorney serving all of Southeast Idaho. As a Life Care Planning law firm, the Elder Care Practice of Tom Packer offers a holistic solution for families struggling with the demands of an elderly loved one’s care.