Dear Monty: My husband and I are in our 70s. We are thinking about leaving our home to our kids when we are both departed. We are a close family, and they all enjoy coming home with their kids. We have received advice from our friends. Some think it is a beautiful idea, and others think it is not a good idea. Any thoughts you could share would be appreciated.
Monty’s Answer: Leaving your home to the kids is not an easy decision. Many people have done this with no adverse consequences. Others have done so and created divisions between their children. Your children’s circumstances and ideas may change over the time you include your wishes in your last testament and the time of your passing. Many events, including financial, health, or employment-related, could affect an offspring’s willingness or ability to participate. It could also be that your wishes bring happiness and fond memories to the next generation.
I have no good examples to share because there is no reason to write in when there is a good experience. Based on the letters to Dear Monty over the years, here are the four main issues that develop after both of you have departed, sometimes long after you passed:
No. 1: The children did not create a partnership agreement between them.
No. 2: One or two children want to leave the partnership, often because the remaining children want to improve the property or need capital for expenses.
No. 3: One child, or that child’s relation, is occupying the home.
No. 4: Children want to cash out because they have a different use for the asset.
Consider seeking advice from an attorney that specializes in estate planning to help you assess your situation and create a document that may minimize the chance of an unexpected outcome. They can offer options based on the experiences they have encountered in their private practice. Should you put the house in your children’s name now? Should you assume that if you do nothing now, the kids will figure it out? Should you create a living trust and retitle it now?
There are many ways to accomplish your goal, and they vary from state to state. There are tax ramifications to each of the methods from which you can choose. Your finances, your health, and what your children want may impact your choice.
It is often a good idea to discuss what you contemplate with your children while you are alive. The attorney can offer the pros and cons of such a discussion.
It is easy to rationalize that all will end well in your family. Still, things go awry in good families. Planning for the event will help take your emotions out of the conversation.
Finally, when seeking an estate planning attorney to help, consider interviewing two or three. Do they have references? How much will it cost? Will they each reach the same conclusion? What percentage of their practice is estate planning? Do you have friends you trust that you can ask about their experience if they have already established a plan with an attorney?