What Are The Pros And Cons Of Giving Your Assets To Children In A Will?
One advantage of giving property to children in a will is that the person can name exactly who they want to have receive their property. Another advantage is that the creator of the will always have lifetime rights of control over the property. Unlike joint tenancy or with life estates, the individual will not need to ask their children to sign off on any kind of sale, refinance, or reverse mortgage. Naming the beneficiaries under a will also provides property tax benefits. The main drawback is that in order for a will to work, the probate process will be necessary, which can cost anywhere from approximately $1,900 to $4,500.
Can I Sell My Property To My Children At A Bargain Price?
If someone sells their house to their children at a very low price, then under the law, that will be considered the same as gifting it. Selling property at a bargain price is very similar to selling it at bottom-dollar value in order to avoid realtor and other fees associated with transferring real estate. When someone does this, they may or may not have to pay income taxes on the sale of the property if there’s appreciation. The person’s children would need the liquidity and finances to be able to purchase the property, because it may be unlikely that they would want to get a mortgage to do such a transaction.
Selling a house at a bargain price could also impact a person’s ability to get Medicaid in the future, particularly if the state of Florida views the transaction amount to be too low compared to the full value. Yet another consequence of selling a house at a bargain price and receiving cash is that the cash would be subject to nursing home spend down, and an elder law attorney would be needed in order to help protect those proceeds. In most cases, selling a house to the children is not the optimal choice.
What Are The Benefits And Disadvantages Of Doing A Joint Tenancy With Your Children?
Joint tenancy is usually done with the eye of avoiding probate, and if that is someone’s goal, then it needs to be done as a joint tenancy with rights of survivorship and not as joint tenancy in common because the latter does not avoid probate. The consequences of doing joint tenancy are similar to those of gifting a house to children in that they involve concerns about Medicaid lookback period violations, and/or loss of homestead exemptions. If a person gifts property to their children, they will be losing some degree of income tax benefits. In addition, there could be negative asset protection and creditor protection problems should the child get into an accident, get sued, or accrue a lot of debt. Joint tenancy is typically not preferred when it comes to handling property with one’s children.
What Happens If I Sell My Property To My Children And Then Rent It Back?
I have never dealt with a situation involving a parent who sold their house to their children and then rented it from them. In part, this is because most children would not want to buy a house if they are going to inherit it anyway. There are also Medicaid and asset protection problems that would likely arise. For most people, it would simply require too much paperwork and be too much of a hassle. There are better ways to handle a house, such as through an enhanced life estate or revocable living trust.
For more information on Giving Assets To Children In A Will In Florida, an initial consultation is your next best step. Get the information and legal answers you’re seeking by calling (904) 398-6100 today.
Call Us Today
(904) 398-6100
