Your house was the single biggest purchase you ever made. You tended it lovingly for years and you naturally want to pass it on to your children when you pass away.
Such an important transfer of assets must be handled carefully. Here are some of the things you may want to consider as you make your plans:
- Is there a mortgage? If so, you need to find out if the mortgage comes due when the property is transferred. Should the balance be paid by the estate? How will that affect any other inheritance you wish to leave your children?
- What do your children want? Typically, when siblings inherit a home together, they may sell the home and split the proceeds, keep the home and rent it out or work out a deal where one sibling keeps the home and buys out the shares belonging to the others. If you don’t know their plans and dreams, your will may not accomplish your goals — especially if you want the home to remain in the family.
- Can your heirs afford the upkeep and taxes? Even a free home can be expensive. Also, not everyone has the physical or financial capacity to manage repairs — especially if they have busy lives or limited income.
- What are the tax liabilities on the inheritance? You don’t want to saddle your kids with a massive tax debt that could eat away the rest of their inheritance — and capital gains taxes could be an issue if they don’t want to live in the home.
It may take a consultation or two with a financial planner and your heirs to decide exactly what should be done with the family home when you pass away. An experienced attorney can also help you explore all of your legal options.