For most people, their most significant asset is their residence. Typically, once a person reaches the age of retirement their home has substantial equity and hopefully not a huge mortgage. In some situations, parents may consider transferring their residence to their children in advance of their death in an effort to avoid probate issues and protect the equity, but this is not always the best decision for every family.
While this can sometimes be an effective strategy, it is often times not the perfect solution for several reasons.
- Property Taxes: If you transfer your residence to your children before your death, you will likely miss out on various property tax discounts such as homestead exemptions and senior discounts. In some situations, this could result in several thousand dollars a year owed in additional property taxes.
- Debts of Children: Perhaps the most significant concern about transferring any valuable asset to your children prior to your death is the threat that it might be lost due to any debts of your children before your death. In the event you transfer your residence to your child prior to your death and then he is sued for a past due credit card or liability due to a car accident, your house may become subject to his debt. In the worst case scenario, this could result in you being forced to leave your residence so the creditor can sell the property.
- Future Family Discord: While you may currently have a great relationship with your children, it may become strained in the future. In the event of future disagreement, it is likely not a good idea to rely solely on your children’s good nature to allow you to reside in “your” residence which they now own.
- Multiple Children: If you have multiple children, you may not want to transfer the residence to a single child. If you do so, it may cause significant strife between the children, especially since that child will not be under any legal obligation to share the value of the residence after your death. In the event you put your residence in the name of all your children, other concerns arise about who is going to get the right to live in the residence and/or be responsible for managing the property.
Thankfully, there are other alternatives for estate planning than simply doing a quit-claim deed of your residence to your children. Some options some of our clients have utilized include establishing an Intervivos Trusts to effectively manage the transfer of their residence upon their death or using life estates and right-of-survivorship deeds to satisfy their estate planning objectives.
Before you sign any deeds to transfer your residence to your children, please consider discussing your situation with an experienced estate planning attorney. Please contact our office to discuss how we may be able to help you protect your family and your assets from the complications of probate and unnecessary liabilities. If you need assistance, the experienced North Georgia estate planning attorneys at Durden & Mills, PC can assist you. Call us at (706) 543-4708.