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Gainesville Florida Estate Planning & Elder Law Blog

Wednesday, September 26, 2018

Risks with Transferring Home Ownership to Children

We are often asked about the feasibility of transferring home ownership from older parents to their children. The answer to that question is not a simple one and is different for each family.

While it certainly may help if you want to avoid probate, there are risks and potential problems. So this decision should not be made without careful consideration and the input of an attorney who understands estate planning issues.

The first and most obvious consideration is what to do if there are multiple children.  Like many other decisions regarding the assets and estate of older parents, how you handle the disposition of a home can create significant family problems.

Beyond that, here are examples of some of the other risks.

If you sell the home during your lifetime, you may be facing serious income tax problems. The Principal Residence Exclusion is an important tax break that is available to homeowners, and you will need to understand how this exclusion works before you sell the house to another family member. There are further tax implications if the house later gets sold by that family member during your lifetime.

Medicaid uses a five-year, look-back period when it considers how to pay for nursing home care. A house transfer could disqualify you for Medicaid if it occurred within five years of the application.

Additionally, a number of things could happen to the child you transfer the house to, and these can cause problems as well. Some of these possibilities that would have implications include the child’s divorce, the child suffering a serious accident, or the child passing away before you.

These are just a sampling of the things to consider before transferring a life estate in your home to a child. Again, the best solution is to seek the advice of an estate planning attorney.



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