Strategies for Ensuring Your Kentucky Home is Passed on to Your Children
Your family home likely holds significant value for you, both financially and sentimentally. Whether you raised your children there or moved there later in life, it’s likely one of your largest assets and one that you want to pass on to your children. The value of a home is also what makes it somewhat challenging to give to others, due to gift taxes, Medicaid eligibility, and other factors.
Working with an experienced estate planning attorney in Louisville can help you find the best way to give your home to your children without saddling them with significant taxes and other expenses. Call John H. Ruby & Associates at 502-373-8044 to set up a time to meet with our team now.
Transferring Your Home Over Time
If you do not want to transfer the home outright, you may want to transfer it over time to your children. This can limit the gift taxes you incur and ensure that you can continue living in your home for as long as you need. Some prefer to transfer their home to their children via gifts each year. By giving up to $17,000 per year, you can slowly transfer ownership without triggering gift taxes. If you are married, you and your spouse can each transfer $17,000 per year.
You may also wish to establish a trust that allows you to maintain control as the trustee until you pass. While this doesn’t technically transfer the home over time, it allows you to assert your final wishes while still remaining in your home for as long as you wish.
Giving the Home Outright
Some simply wish to wash their hands of the hassles of home ownership and give it to their children before they pass. This may be the best option for you if you have a home that’s too large for you and your spouse, and you want to see your child enjoy it with their growing family. By transferring the title of the property to your children, you can give them ownership outright.
Although Kentucky does not have an inheritance tax, the federal gift tax will definitely come into play in this scenario. Anything above $17,000 per person will likely be subject to the gift tax. The gift tax ranges from 18% to 40%, depending on the amount gifted. You will be responsible for paying this amount, so make sure that you have budgeted for it. Although your children won’t have any tax issues to deal with immediately, they may have to pay capital gains taxes if they sell the home in the future.
If you choose to go this route, ensure that you have a rock-solid plan for where you’ll live and how you’ll meet your future needs. You want to spend these years in security and relaxation, not worrying about covering basic living expenses because you gave your largest asset to your children too early.
Passing the Home to Your Children Upon Your Death
If you do not want to give your home to your children until you pass away, there are several ways you can do this. You may simply give it to them in your will or put the home in a trust. This involves naming one of your children as the trustee upon your death.
Whichever route you choose to pass along your home, ensure that you are able to meet your needs for the rest of your life. Talk to your estate planning attorney about Medicaid planning and if your plans for your home will affect your ability to pay for long-term care.
Issues Related to Multi-Party Ownership
If you have multiple children, think carefully about how you want to give the home to them. When one sibling wants to keep the home and the others don’t, things go smoothly as long as the first sibling can buy out the others. If multiple siblings wish to keep the home or the person who wants to keep the home cannot buy out their siblings, family fights can be fierce. Protect your children from making these tough calls by discussing your options with your attorney.
Start Your Estate Plan with John H. Ruby & Associates
A thorough estate plan will help you make the most of your golden years in Louisville. Let’s sit down and talk about what matters most to you—call us at 502-373-8044 or get in touch online.