If you are currently in your retirement years and are still living in the home your children grew up in, there is little doubt that the home is full of memories for you, your children, and even your grandchildren. Consequently, you may wish to keep the home in the family and pass it down to your children. While that sounds like a simple enough goal, it can be emotionally, practically, and even legally complicated. To help you understand the hurdles and options available to you, a Grand Forks attorney at German Law discusses how to pass down the family home to your children in your estate plan.
Keeping the Family Home in the Family
After living in a home for decades and watching your children and grandchildren grow up in the home, it is hard not to have an emotional attachment to the home. On top of your emotional attachment, the home has likely appreciated considerably over the years, making it a valuable estate asset at this point. If your goal is to keep the family home in the family, you will need to decide who should inherit the home and how to legally transfer ownership of the home in your estate plan.
Options for Passing Down the Family Home in Your Estate Plan
Although there are more complicated options, there are three basic ways to pass down the family home to your children in your estate plan. The home can be gifted in your Last Will and Testament, it can be transferred into a trust that names your children as beneficiaries, or you can title the home such that a child or children automatically inherit ownership upon your death. Each of these options has advantages and disadvantages.
Gifting the family home in your Will is simple and straightforward; however, there are things to consider before choosing this option. Assets gifted in your Will are required to go through probate. Not only does that mean that your children will need to wait until the conclusion of probate for legal ownership of the home to be transferred, but it can also put the home in a risky position. If the debts of the estate, including gift and estate taxes, exceed the available liquid assets, the Executor may be forced to sell estate assets to satisfy debts, putting the home at risk.
Another option is to transfer the title of the home into a revocable living trust. As the Trustee of the trust, you continue to control the trust assets, including the home, while you are alive. A primary benefit of using a living trust is that assets held by the trust bypass probate after your death. Consequently, your children do not need to wait to inherit the home. Instead, the trust terms can “distribute” the home to your children as soon after your death as you wish. Keep in mind, however, that if you rely on Medicaid to help cover long-term care expenses during your lifetime, transferring your home to a revocable living trust does not exclude the value of the home from Medicaid eligibility calculations nor does it protect the home from the Medicaid Estate Recovery Program after you are gone.
Finally, you can modify the title of the home to joint ownership with rights of survivorship. This type of joint ownership allows the legal ownership interest of a co-owner to automatically pass to the remaining co-owners upon the first co-owner’s death. As such, your legal interest in the home will automatically pass to your children when you die. One important potential downside to using this option is that, unlike the other options, re-titling the property results in your children gaining a legal ownership interest in the property while you are alive as well as gaining full ownership after your death.
Do You Need Help Deciding How to Handle the Family Home in Your Estate Plan?
Please join us for an upcoming FREE seminar. If you want to discuss how best to pass down the family home in your estate plan, contact the Grand Forks estate planning attorneys at German Law by calling 701-738-0060 to schedule an appointment.
- Comprehensive Estate Planning: A Guide to Securing Your Legacy and Honoring Your Wishes - February 22, 2024
- North Dakota Guide to Avoiding Probate - February 20, 2024
- There’s No Better Way to Say “I’ll Be There for You” than with an Estate Plan - February 15, 2024