What Is a 529 Plan? A 529 plan is an investment account that offers tax…
How Can I Easily Pass My Home to My Only Child?
This estate planning issue concerns a single retired parent of an only adult daughter and how to transfer the home to the daughter. Should the daughter simply sell the house when her mother dies, or should the daughter be added to the deed now while her mother is alive?
Also, is there a court hearing?
In many states, there is no reason or requirement to go before a judge to probate your estate, says nj.com in its recent article “Should I add my daughter’s name to my home’s deed?”
In estate planning, there are two primary questions to answer about the transfer of the home. First, there would possibly be some significant capital gains if the mom adds her daughter to the deed prior to death.
Also, if the mother winds up requiring Medicaid, Medicaid might put a lien against the home after she dies for the value of the services it provided.
Generally, when a home has been owned for a long time, the mother should try to preserve the step-up in basis for tax purposes that happens, if the real estate is still in the mom’s name at her passing.
Whether that step up is preserved, depends on how the daughter is added to the deed.
Adding the daughter as a joint tenant or tenant in common won’t preserve the step-up basis for taxes. Ask an elder law attorney what this means in your specific situation.
A better option may be to transfer the remainder interest in the property to the daughter in this scenario and withhold a life estate for the mom.
That will preserve the step-up in basis at death.
This can also get complicated when there’s an outstanding mortgage, so speak to an experienced elder law or estate planning attorney.
Reference: nj.com (Dec. 15, 2020) “Should I add my daughter’s name to my home’s deed?”
Read more related articles here:
Four ways to pass down your family home to your children
How to Pass Your Home to Your Children Tax-Free
Also, read one of our previous blogs at:
Is Transferring House to Children a Good Idea?
Click here to check out our On Demand Video about Estate Planning.