Deed Home to Avoid Probate?
I’m periodically asked why parents can’t simply deed their home to their children to avoid probate.
If they do so and they’re lucky, that approach could work. But if they’re not so lucky, the results can be disastrous for the parents, for the children, or for both.
So, what could go wrong?
Children’s Creditors: After the children hold title to the home, if any of the children have creditor problems, the creditors of those children can force the sale of the home, even while the parents are still living there. The result would be that the parents are evicted from their own home.
Feud with Children or Between Children: And what happens if the parents and the children have a falling out after the children own the home? Or if a schism develops between the children who have been given title? Do you really want to place your largest asset under the control of someone who might turn out to not have your best interests at heart?
Tax Impact for Children: Depending on how long the parents have owned the house and how much it has appreciated during that period, a gift of the home while the parents are still living could increase the capital gains taxes that the children owe when they sell the home by tens of thousands of dollars.
Medicaid Disqualification: If it turns out that the parent needs to move into an assisted living facility within five years of having gifted the home to the children, the parents will likely be unable to obtain Medicaid assistance to pay for the assisted living facility until that five year period (after the date of the gift) has run. The parents will lose the opportunity of obtaining the assistance that may be urgently needed.
With all this in mind, anyone considering a gift of a home as a means of avoiding probate should think very, very carefully before undertaking such a step. The results could be a disaster.
Author: Barry Peters. For additional easy-to-understand information on Wills, Trusts, and Probate, call attorney Barry Peters’ offices at (208) 939-2600 for your expedited appointment for a FREE OFFICE CONSULTATION or visit his Q & A pages at BarryPeters-Law.com/answers-to-questions. As always, your total satisfaction is guaranteed by Barry Peters, Attorney at Law, where all clients receive individual attention to the details of their unique circumstances.