Experienced NY Estate Planning Attorney Discusses the Right Time to Transfer the Family Home
When considering your estate plan, one thing you may wonder is whether you should leave the family home to your child or children. You want your loved ones to have your home and a place to live, but there are things that you need to consider first before making such a critical decision.
You May Leave Yourself Without Assets Too Early
If you plan to live at home independently, you may be thinking unrealistically. After all, what happens if your health changes suddenly and you need to reside in a nursing home or hospice center? While this can happen, you must pay for your home or finance the cost of an assisted living facility. Your home is likely a large asset; therefore, giving it away could limit your financial options for care in the future.
You Lose Your Right to Stay at Home (in Certain Cases)
If you were to give your family home to your children, you may not agree with your children when they decide it is time for you to leave the home and receive care elsewhere. While adults want to trust their children, there are circumstances that could make it difficult for you and your adult children. Consider, for example, that an adult child inherits the home and moves in with his or her family. However, later the adult child divorces. The family home is now an asset in his or her divorce, which means that the former spouse could receive the home in the settlement – leaving you with nowhere to stay.
The Issue of Property Tax
You may have reduced real estate taxes due to age or limited income. If your children receive the home, the tax breaks will go away and they will pay the market tax rate for the home.
Children Could Pay Income Tax
You bought your home for a great price years ago; however, it is worth much more today. Therefore, when you give your children the home and they choose to sell that home later, they could face income tax on the profit for the home.
Eligibility for Medicaid May be Affected, Too
When using Medicaid assistance for your bills or assisted living facility fees, if you were to give away the family home, you could be penalized by the government program. Then, when you are out of money, Medicaid may withhold assistance for up to 17 months. This could significantly impact your quality of life.
Instead, Consult with an Estate Planning Attorney
While there are definite disadvantages, there are ways to leave your family home to your adult children without harming your future. Your estate planning attorney can go over those options with you, assess your end-of-life care needs and financial status, and more. He or she will look for any potential negative outcomes and ensure that your wishes are carried out – all while ensuring that you do not put yourself in a compromising situation after doing a good deed.