Taxation & Estate Planning

Giving Property To Your Children - Talk To Someone First

By michael

What could go wrong?

• If you give property to a child, it could be at risk if that child is sued or files for bankruptcy.
• If you put money in your child’s name that they plan to hold on to for your future use, this could count against them if they need to apply for financial aid for their children or for themselves. 
• If you pass the remainder interest in your home to a child, you will not be entitled to the full proceeds from the sale if the home is sold during your lifetime.  You will only be entitled to the share of the proceeds that are allocated to the life estate, and your children will be entitled to the proceeds that are based on the value of the remainder interest.  This could significantly reduce the amount of money you thought you would receive upon the sale of your home. 
• If you pass the remainder interest in your home to a child, and that child later needs to file bankruptcy they could be forced to sell their share in the family home to satisfy their debts. 
• If you give property to your child, either cash or real estate, that property could be at risk if your child goes through a divorce.
• If you give your property to a child, you may end up needing it for your care and be unable to access it when you need it.
• If you give real estate to a child, there may be negative tax consequences for them when the property is sold.

Check out this post from Leeanna Hamill at her Massachusetts Estate Planning and Elder Law blog for the rest of her very good advice.

Please talk to someone.  Thanks Leanna.  Good stuff.

Full post as published by The Ohio Trust & Estate Blog on March 01, 2009 (boomark / email).