For most of us, our home is the most valuable asset we have. It’s also often a highly sentimental one. That’s why you need to give it careful consideration when you do your estate planning. You want to make a smart financial decision about what will happen to it when you’re gone.
Many people leave their home to one or more of their children. That can necessitate some difficult conversations if you have multiple children who were counting on inheriting the family home. Whether you have one property to hand down or an additional vacation home, the bequeathing of all properties need to be done responsibly. Otherwise, there can be legal, tax and financial burdens for your children that you didn’t anticipate.
There are different ways to leave your home to your children. Your estate planning attorney can explain each in detail and offer advice on which is best in your particular situation.
If you decide to give your children the property, a revocable living trust is often advisable. This way, you have the option to change your mind. There will be fewer tax implications if the property isn’t transferred until after your death. If you decide to transfer ownership on a mortgaged property, ensure that your lender won’t require the mortgage to be paid in full immediately.
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If you decide to sell your property to your kids, be careful. Parents often want to give their children a low price. However, if you sell it at less than fair market value, it’s considered a gift, and there will be tax implications.
It’s essential to discuss your property with your children during the estate planning process. If they don’t live in Pennsylvania and have no interest in maintaining and renting out the property, or they simply can’t afford or don’t need it, it’s best to make it part of your trust and designate what will be done with it when you die. Often, people designate the property to be sold by the trust.
Your Pennsylvania estate planning attorney can go over all of the options with you. During the estate planning process, these attorneys get to know the dynamics of the family as tough decisions are made — even if they don’t meet everyone involved. Your attorney can advise you not only on the pros and cons of the various options, but on strategies for helping all of your children feel included.
Source: Forbes, “4 Ways To Pass Down Your Family Home To Your Children,” Michele Lerner, accessed Nov. 05, 2015