Whether you have visions of future generations gathering in your home every Christmas long after you are gone, or you just want to make sure you have something of value to leave to your children, you will have to do some proactive estate planning to make sure your house passes to your heirs in a way that accomplishes your goals. An estate planning attorney can walk you through the pros and cons of all of your options, but we provide an overview of some popular options here.
The First Step Is to Figure Out What Everyone Wants
The most important thing you can do is talk to your children or other heirs about what you want for them and what they want from you. It may be your deepest desire to provide a place for all of your children and grandchildren to reunite over the holidays or summer vacations, but if your children know that’s unlikely to happen, it’s better to understand that before you draft an estate plan. As much as you might like to, you cannot control how your children and grandchildren will interact after you are gone.
You also have to take the economic circumstances of your heirs into consideration when planning to bequeath a house. You might have one child who is less financially stable than their siblings and would want to live in the house rent-free, while the other children would want to sell it and take the money. Leaving a house to all of them equally will inevitably cause problems.
If the house in question is a vacation home, it is especially important to talk to your children about whether they would want the house or not. Does someone have to manage renters? How will you divide time equally among several heirs? Can everyone easily get to the house, or does the location favor one heir over the others?
These are difficult conversations to have, but if you don’t get everyone’s thoughts out on the table, the family home could cause more strife among your children than you would ever want.
Choose the Right Tool to Suit Your Goals
Once you have a good understanding of your children’s preferences, you can meet with an estate planning attorney to discuss the best options. Some common ways to pass a home on to heirs include the following:
- Last Will and Testament. The simplest way to designate an heir for the property is to name them in your Will. This could be a good option if you only have one child or if you have discussed your plan with your children and are leaving the house to one child and its value in other assets to other children. Leaving a house to multiple people in a Will is likely to cause problems. The downside to using your Will to transfer property is that it will have to go through Probate, which can be costly and time-consuming.
- Revocable Living Trust. For most people, the best option is to transfer the house into a Trust while you are alive and name the beneficiary within the Trust document. If your children have made it clear that they don’t want to inherit the house, you can leave instructions for the Trustee to sell the property upon your death and disperse the proceeds to your heirs.
- Transfer on Death Deed. With this kind of Deed, the house remains in your name until you die and then passes directly to the named beneficiary without going through Probate. This could be a good option if your heir is already living in the house or if it is the only asset you have to pass on.
- Lady Bird Deed. While we don’t usually recommend traditional Life Estates, a Lady Bird Deed can be a good option if you want to avoid Probate and protect your house from the Medicaid Estate Recovery Program.
There are potential tax and Medicaid eligibility implications for all of these options, so it is important that you work with an estate planning attorney to decide which best option is best in your particular situation.
Ross & Shoalmire, PLLC, Will Guide Your Way
You want to protect what you’ve worked your whole life to earn, and you want to be able to leave something to your heirs. How you do that depends on your unique situation. Contact the Elder Law and Estate Planning attorneys at Ross & Shoalmire, and we’ll help you come up with a plan that works for you.