November 22, 2013   Inheritance

Before You Transfer Your Home to Your Child – Read This


transfer home to child For every person who transfers his or her home to an adult child without incident, there is another person who regrets his or her decision to do so. As with many estate planning tools, transferring a residence to an adult child is not the best option for everyone. If you are considering transferring your home to an adult child, it is important to first consider the risks involved.
 
Loss of Control
Although obvious, it is important to remember that by giving your home away, you deprive yourself of the right to control it. This means that your adult children can charge your rent to live in your home, or simply kick you out. Moreover, you cannot keep the home from being mortgaged or sold.
 
Medicaid Ineligibility
One common reason people choose to transfer their homes to their children is to reduce the value of their estate in order to qualify for Medicaid assistance. However, Medicaid employs a look-back period of five years when determining eligibility for the program. Therefore, if you give your home away within five years of applying for Medicaid, the value of the home will likely be included in the value of your estate, thereby making you ineligible for Medicaid assistance.
 
Losing the Home to Your Child’s Creditors
It is typically not advisable to transfer a home to a child who is in debt. Although the child could certainly use the assistance, there is often nothing from keeping the home from the claims of your child’s creditors.
 

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