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Signing Over the House |
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My parents are retired and own their home, free and clear. They are considering signing their home over to my sister and I so that down the road the asset will be protected should they enter a nursing home. My sister and I are not concerned about losing our inheritance and would rather our parents obtain the best care possible with the hard-earned money they've accumulated over their lifetimes. What are the pros and cons of this approach and is it really in the best interest of both our parents and us? |
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No one financial strategy is right for everyone -- a lot depends on the situation of the parties. I can't know enough about your parents or you to tell you what to do. Your folks should discuss the matter with a lawyer who specializes in estate planning or elder law, for advice tailored to their specific goals.
For instance: If your folks sold their place, would they have a large capital gain? If so, you should realize that if you get their house as a gift, you also get their cost basis. While they could sell and use the homesellers tax exclusion, you could not. YOu'd owe capital gains tax on the profit. If on the other hand, you waited to inherit the house, you'd get it with a stepped-up cost basis, value at the time of death, sell it for about that amount, no tax due.
That's sort of complication explains why you need professional advice about, tailored to your needs and theirs. They shouldn't try to figure out the best way to go all on their own. That's about all I can tell you. |
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Edith
Originally published on April 12, 2009 |
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