It's understandable how people can become very attached to their homes over the years, and are often reluctant to part with them even when market conditions are favorable or it's likely in the best interests of their finances.
In other words, fond memories and neighborhood friends often trump potential profits and a better location.
Just as people can experience a degree of hesitation when faced with the prospect of selling their family home, they can also experience a degree of uncertainty when trying to decide what to do with their family home upon their demise.
That's because their children may all be in different financial situations or have entirely different viewpoints concerning what should be done with the place they called home for so many years.
To illustrate, one child may have several children and want to home to be sold to supplement college savings, another child may have plenty of money and want to convert the home into rental property, while still another child may want to purchase the home from their siblings.
Given the potential for problematic scenarios like these, experts advise homeowners to think long and hard about just how well their children get along, and even consider having a frank family discussion with them about how the matter should be resolved.
At the very least, experts advise homeowners to be aware of at least three basic options:
- Drafting your estate plan in such a way that the family home is to be sold upon your death and the proceeds divided among your children.
- Deeding the family home to your children while you're still alive (However, experts advise people to remember that this step results in a complete loss of control regarding any and all decisions related to the home).
- Drafting your estate plan in such a way that the family home is to be inherited by your children, essentially leaving it up to them how they wish to proceed. (At the very least, if they decide to sell the family home after your death the tax advantages will be favorable.)
Estate planning as it relates to the family home can prove to be a somewhat difficult topic for many people. In light of this reality, it may be worthwhile to consider speaking with an experienced legal professional who will not only take your unique concerns into consideration, but also explain the law, answer your questions and help you gain peace of mind about the future.
Source: The Fiscal Times, "Should you leave your home to your kids?" Sheryl Nance Nash, June 5, 2014