What Do I Need to Know Before I Give My Home to My Children?

Hi. This is Mark Powell, a Scranton attorney – Legally Speaking. One of the most frequent questions we get is whether someone should deed their house to their children prior to death. Now, often, this is driven by the desire to save estate tax or to avoid the home going to a nursing home. Unfortunately, deeding your home to your children can have huge consequences. First, your home is often your largest asset and the greatest security that you will not be forced into a nursing home if you have the financial means to have aides or assistants in your home. And, if you’re doing it to avoid or reduce inheritance tax, you can end up actually paying more in capital gains because the children inherit the basis that the gift is provided to them, and capital gains is at a much higher rate than a reasonable inheritance tax at 4.5 percent. The greatest consequence is that, by gifting a home, you’ve taken an exempt asset and made it subject to a Medicaid contribution. In other words, Medicaid may not pay because you’ve gifted the home. If you are considering estate planning, consult with an attorney so that you know the consequences of gifting your home to your children prior to your estate transfer by a will.

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