Giving The Family Home To Heirs? Be Careful! / Overland Park, KS

Giving the family home to your heirs early? Take great care! This is too important a gift to get wrong, and it is too easy to do just that.

This challenge was the subject of recent article in The Wall Street Journal titled the “Dangers of Giving Your Home to Your Children.”

The family home is often the most important gift you could ever give to an adult child or your adult children in Overland Park or elsewhere. It is meaningful simply because it is the "family home" after all, let alone its place in the family history.

When given to a young couple it is also a gift of the future, and a very practical one if you do not need the space anymore or just wish to downsize. On the other hand, houses are as complex as they are valuable when considered as assets and potential tax burdens.

Giving the house away early means moving a taxable asset around and doing so at different times and in different ways will trigger different tax burdens. These issues include weighing the consequences of a lifetime gift versus as a testamentary bequest. In the end, you need to fit the house into your overall plan, and carefully at that.

Then there is even more to the financial side and the darker side of liability. A house as an asset is a magnet for creditors, divorce proceedings, and all manner of scaly legal problems that make claim or foreclose upon the house under the name of a younger, less financially stable, adult child. Giving it to them to live in forever might end up risking it to creditors, and if you intend to stay living there that means putting you out too.

And what about control?

Not all family problems work themselves out, after all. It is now up to the kids to keep or sell the house, even against your wishes and, again, even to evict you right out onto the curb if you intend to still live there.

So, do appreciate the house and the gift of it to your loved ones. At the same time, however, also appreciate it as a difficult transition fraught with potential issues to guard against.

Once you appreciate the issues you can appreciate the solutions, and depending upon the house, your heirs, and your own needs there are many powerful solutions at your disposal.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.

Reference: The Wall Street Journal (April 13, 2014) “Dangers of Giving Your Home to Your Children”

Suggested Key Words:

Estate Law, Real Property; Inheritance; Asset Protection; Creditors;