QUESTION
How can I give custody of my house to my kids?
Asked on May 30th, 2011 on Estate Planning - Georgia
More details to this question:
I would like to turn my house over to my two grown children, before my health requires me to go to assisted living. Is there a time limit on when this can be done prior to such a move? If I turn the house over to them, would they have to pay taxes on it when they sold it? There probably wouldn't be a taxable gain.
2 ANSWERS
1 Award
Rather than give your home to your kids, you may want to consider having an irrevocable trust drafted on your behalf and place your home into the trust. Your children can be made to be the trustees of the trust. While they will be in charge of the house, you may retain certain right to the home. Also, if the receive the house after you pass from the trust, they will likely not have to pay any taxes when they sell the house. However if you give them the house, they ma have to pay a capital gains tax on any profit made from the sale of the house. The profit from the sale will be determined by home much the home sold for less how much you paid for it when you originally bought it. Talk to a qualified attorney on how an irrevocable trust can help your situation.
Answered on Jun 03rd, 2011 at 8:53 AM
Glen Edward Ashman
You need to sit down with a lawyer to discuss the pros and cons. Amongst them: If you do require assisted living and file for Medicaid, the state can seek reimbursement backwards in time for the value of the property. So even if you wait a few years, this can be a problem. Also, if you gift too much (and this would take a very expensive house) there could be gift taxes to pay. Even with a smaller amount, a return may have to be filed. The income tax/gain issue depends on future numbers, but it also needs to be considered. Finally, you have to also weigh other ways to transfer property such as a deed that reserves a life estate, or joint tenancy. The best answer for you will depend on your detailed facts so again, see a lawyer.
Answered on Jun 02nd, 2011 at 10:44 AM