Passing on Real Estate

[art991]

I am 81 years old and own my condo.  I want to pass it on to my 2 children.  Should I put the title in their name now or just wait for my will to pass the title to my children?

Thank you.

[xmasbaby0]

You should consult with an elder care attorney.   You are not asking a tax question---which is what we are here for.  You are asking a legal question.   And.....be aware that if there is some chance you will need to go on Medicaid at some point, there is a five-year lookback (Medicaid estate recovery) and any assets you give away may be subject to that lookback.   

[VolvoGirl]

It's usually better to wait and let them inherit it.  If you put it in their name it is a gift now and they get your cost basis instead of getting a step up in value at death. 

[Opus 17]

Lawyer lawyer lawyer lawyer lawyer lawyer lawyer lawyer.

In general, your children will pay less tax if they inherit the property than if they are given the property.

However, also "in general", if you own property and require long term medical care, you can be required to sell your property to pay for your own care until you have less than $2000 of "countable assets" left, at which point Medicaid will take over.  This is why some parents give away their property to their children, which "saves" the property but can subject the children to high taxes when they sell.

And also, "in general", if you give away your property in order to get under the Medicaid asset limit, Medicaid can claw back those gifts made within 5 years, so your kids end up with nothing anyway.  (If you unfortunately need long term medical care.)

There are ways to protect your assets while at the same time protecting your children from high taxes, but the options are complicated, and there is no one-size fits all solution.  See if you can find a reputable Elder Law/Financial Planning firm in your area.  The consulting fees will be worth the money and trouble they can save you.