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.