How can I give custody of my house to my kids? 5 Answers as of June 03, 2011I 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.
Burnham & Associates | Stephanie K. Burnham
There are time limits that are important if you are going to use Medicaid to pay for assisted living. Routinely, the time limit is five (5) years from the day you enter an assisted living facility or you qualify for Medicaid whichever is later. There also may be limitations based on what type of facility you enter. You should think hard about transferring your home, as the way to turn your home over to your children is through a real estate deed. You may want to consider using a Trust to prevent your children from making decisions about your home before you are ready for them to. Any taxes that the children would pay when the home is sold would likely be Capital Gains. You should speak with an Elder Law Attorney about your specific situation before you make any commitments about your home.
Answer Applies to: New Hampshire
Law Offices of Brian Chew | Brian Chew
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.
Answer Applies to: California
Law Office of Richard B. Kell | Richard B. Kell
You can sign over the property to your children outright, or you sign over title but reserve what is known as a "life estate" in the property. The life estate would give you the full rights to the property until your death, at which time title would then automatically pass to your children. The latter method is the best way for your children to avoid paying capital gains taxes since they would receive a "stepped-up cost basis," which significantly reduces the potential for tax liability. The only time limit that you would be facing concerns the potential for an earlier than expected demise or mental incapacity. I hope this helps to answer your question.
Answer Applies to: Massachusetts
Ashman Law Office | 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.
Answer Applies to: Georgia