Methods to Pass Your Home to Your Heirs

Many Florida residents plan to leave their home to theirproperty. Technically, he/she has the right to sell it or
children. There are a variety of ways to pass yourdo anything else with it, without your consent.
home to your heirs. Careful consideration of eachDisadvantage: You will lose your Florida homestead
method is vital, since each method has legal andexemption which would otherwise decrease the
financial ramifications, and may also impact on yourassessed value of your home for property tax
long-term care planning.purposes by $50,000.
1. You can deed your home to your child, giving youDisadvantage: If your child does sell the house while
and your spouse the right to live there for the rest ofyou are alive, he/she will have to pay capital gains tax.
your lives (a life estate).If you had sold it, you would have been titled to a
Advantage: Your child will own the home when you$250,000 capital gains tax exclusion for the sale of
pass on.your primary residence.
Disadvantage: You give up control. If you ever wish toDisadvantage: If your child sells the home after you die,
sell your home, you will need your child's permission. Ifyour child will lose the step-up in basis and will have to
you do sell, you will be entitled to a percentage of thepay capital gains tax based upon the original purchase
proceeds based upon the value of the life estate.price.
Disadvantage: If you ever need to apply for FloridaDisadvantage: If you apply for Florida Medicaid benefits
Medicaid for long-term care, Medicaid may considerfor long-term care, the transfer of your home to your
the proceeds you receive to be a gift, which maychild may be considered a gift and may disqualify you
negatively impact on your eligibility for a period of time.from receiving benefits for a period of time.
2. You can make your child co-owner of the property5. You can place the home in an enhanced deed
- i.e., joint tenant with right of survivorship.(ladybird deed), which gives you the right to remain in
Advantage: When you pass away, your child willthe home for the rest of your life, as well as the right
automatically inherit the home.to to sell it or give it away during your lifetime.
Disadvantage: Again, you have lost a degree ofAdvantage: Your child will automatically inherit the
control. If you ever wish to sell the home, you will needhome when you pass away.
your child's consent. If the house is in fact sold, you willDisadvantage: You may face obstacles if you want to
be entitled to half or less of the proceeds, dependingsell or refinance the property, since some lenders and
on the percentages you and your child own.title insurance companies are uncomfortable with this
Disadvantage: Your ability to get Medicaid in Floridaarrangement.
long-term care benefits may be jeopardized for a6. You can include a provision in your will leaving the
period of time because of the monies you receive ifhouse to your child.
you sell your home.Advantage: You remain in control of the property while
3. You can place the house in a living trust (also knownyou are alive.
as a revocable trust or inter-vivos trust).Advantage: The property will go through probate and
Advantage: You will retain full control over the propertypass to your child when you die.
while you are alive. Your child will inherit it after youDisadvantage: The probate process can be expensive,
pass on.time-consuming and inconvenient for your heirs.
Disadvantage:It may be difficult to secure refinancingEach of these methods must be examined within the
of your home should you ever wish to do so.context of your specific estate planning goals, and
4. You can gift your house outright to your child.family and financial circumstances. Be sure to discuss
Advantage: You and your child may derive satisfactionthe matter with a Certified Elder Law Attorney to
knowing that this is a "done deal," with no stringsdetermine the strategy that is best for you and your
attached.family.
Disadvantage: Your child now has full control over the