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Giving It To The Kids |
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To Edith Lank: This topic has come up numerous times in family discussions. I am 75 and my husband is 79, both in good health though I am aware that can change. We have very little savings but we do own a house worth roughly $275,000. We live comfortably on pensions and social security.
Our children would like us to turn our home over to them, to avoid the cost if we need to go to a nursing home in the future.I believe there is now a five-year window on this before we could go on Medicaid.
Please give us your opinion. |
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I can’t give you information about planning for medical expenses, though I believe that look-back window in many cases is still three years. I can, however, list some drawbacks to putting your home in your children’s names:
If you ever want to sell while you are the owners, you can take up to $500,000 profit free of capital gains taxes, using the homesellers exclusion. But if the house were in your kids’ names at that point, they would owe capital gains tax on the profit, no special tax treatment. And their profit will be the same as it would have been for you. When they get the house as a gift, they also take over your cost basis. (If you bought the house recently and don’t have much of a gain at this point, that might not be important.)
Then, there might be problems if one of your children got divorced, died, or had judgments placed against all real estate they own.
Your best bet is to discuss the whole matter with the lawyer who handles your will and health care directives, or with one who specializes in estate planning.
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Edith
Originally published on February 6, 2006 |
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