As parents age, thoughts about the legacy they’ll leave behind often turn toward their family home. For many, passing down their home to their adult child is an estate planning goal. Whether it’s to provide financial security, preserve family history, or simply keep the home within the family, there are various ways to accomplish this goal. With that in mind, the Indianapolis attorneys at Frank & Kraft discuss options for passing down your home to an adult child.
What Options Do I Have to Pass Down My Home to My Child?
If passing down your home to your adult child is an important goal of yours, you should take the time to plan the right way to accomplish that goal to ensure that both you and your child receive the maximum benefits available. Among the options for passing down your home to your adult child are:
- Gifting the Home Outright: One straightforward option is to gift the home to your adult child. This involves transferring ownership without receiving any monetary compensation in return. While this option allows for a seamless transfer, it’s essential to consider potential gift tax implications, as large gifts can incur taxes. It also may not be the right time for your child to take over ownership of the home.
- Selling the Home at a Discount: Another approach is to sell the home to your adult child at a discounted price. This can provide them with a more affordable way to acquire the property while reducing potential estate taxes. It is crucial, however, to ensure that the sale adheres to legal and financial regulations to avoid any complications. You may also incur problems if you need to qualify for Medicaid to cover the cost of long-term care within five years after the sale of the home if you sell it for less than market value.
- Transferring Ownership Through a Trust: Establishing a trust can be an effective way to pass down your home. You can transfer ownership of the property to the trust and designate your adult child as the beneficiary. This allows for more control over how the home is managed and distributed, potentially protecting it from creditors or divorce settlements.
- Jointly Owning the Home: Co-owning the home with your adult child is another option. Joint tenancy with rights of survivorship ensures that when one owner passes away, the property automatically transfers to the surviving owner without going through probate; however, it is essential to consider the implications of joint ownership, such as shared responsibility for property taxes and maintenance.
- Creating a Life Estate: With a life estate, you retain the right to live in the home until your passing, at which point ownership transfers to your adult child. This option provides you with security and control over the property during your lifetime while ensuring its eventual transfer to your child.
- Selling the Home and Providing Your Child with the Proceeds: If selling the home is the preferred option, you can consider selling it and providing the proceeds to your adult child through a gift or inheritance. This allows them to use the funds as they see fit, whether it’s purchasing a new home, investing, or other financial goals.
Do You Have Questions about The Best Way to Pass Down Your Home to Your Adult Child?
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about passing down your home to your adult child, contact an experienced Indianapolis estate planning attorney at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
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