Should I Transfer The House To My Kids Or Other Beneficiary For One Dollar?
Should I transfer the house to the kids or other beneficiaries for one dollar? Hint – In many cases that’s probably not a great idea. There are generally four reasons why it is not a good idea to transfer your house for a dollar.
Medicaid eligibility problems – Medicaid has a five year look back, which means if you transfer an asset five years before entering a nursing home you will have a large medicaid transfer penalty based on the value of your home. You could also unexpectedly create a lawsuit against the children under the concept of failure to support.
Negative taxes – when you sell your principal residence you generally don’t pay capital gain, however if the children sell the residence it is not their residence and therefore they will have capital gain.
Increased risk and liability what happens if the child passes away before you, gets divorced, or has creditors? Your house is now subject to the risks of your children or other beneficiaries
The better alternatives might be: Do nothing. Use a life estate. Implement joint planning for credit survivor ship or create a irrevocable trust and transfer the house to that.