Before the days of long term care planning and the necessity for other complex tax strategies, children simply moved into the family home and took over the master bedroom after their parents died. Unfortunately, it's not that easy anymore. There are nearly half a dozen ways to give a home to your child. And a couple are tax-free. Only a very few avoid penalties for Medicaid. In order for the transaction to work properly, you've got to plan ahead.
For many families, the family home is the single most important estate asset, imbued with all the memories, hopes and dreams that make it irreplaceable. Family homes also may be the most valuable estate assets, and estate taxes may complicate plans for passing them along to the next generation. If this is your goal, however, don't give up. There are tax-savvy strategies to make it happen, but they require you to plan ahead.
For a good overview of this topic, turn to a recent article in SmartMoney, “Passing Your Home to Heirs.” The article is pretty easy reading on a fairly complex subject, and includes a run-down on some effective strategies: from the simple bequest in your will, to variously structured sales, to more sophisticated trust-based strategies.
Which planning strategy will work best for you depends upon your unique circumstances. The article completely overlooks the problems one needs to address when planning for long term care needs but that likely to be related to the individuality this type of planning requires. Just know that this definitely is not a do-it-yourself undertaking. There are many factors to be considered and legal land mines to avoid. If passing a family home to your heirs is one of your goals, be sure to discuss this with your estate planning attorney, who can guide you to implement a strategy that will work for you.
You can learn more about this topic as well as other strategies on our website under the tab entitled: elder law planning in Virginia . Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.
Reference: SmartMoney (February 5, 2013) “Passing Your Home to Heirs”