This Virginia attorney writes a very good article summarizing some of the problems of transferring real estate to a child as an alternative to actual estate planning. Capital gains tax due to loss of basis step-up, medicaid lookback (California’s medi-cal is more forgiving and a revocable trust may even be enough here to exempt property from medi-cal reimbursement), and of course the risk the child may experience one of the “the four D’s” (debt, disability, divorce, death).
[To learn specifically about the dangers of joint tenancy (a variant on this issue), check our free online “Estate Planning 101” course.]
Read the article:
One of the most common questions we get from clients is whether they should transfer their house to their children. The answer to this question is almost always absolutely not.
Source: Should An Aging Parent Transfer the House to Her Kids?
