Like many Americans, your home may be your largest asset. However, if you have children who have grown and moved away, you’re left with an empty nest, quiet and big. You may be torn between keeping the house and passing it to your children someday, or selling it. On one hand, it may be the biggest asset you could pass onto your children. On the other hand, you have your own immediate needs to consider, and maybe you’re not quite sure your kids could handle the house when you are gone. As a Guilford County Will and Trust attorney, I advise you, before deciding whether to sell or keep your home, consider the following:
Few people will need to pay federal estate taxes, under the new federal estate tax laws. However, your heirs will need to pay for property taxes, along with other upkeep needed. Property taxes increase as property values increase. While your children may want to have your house, they may not be ready to pay the taxes.
Your children might or might not have to pay income taxes when they sell your home. If the children sell an inherited home soon after inheriting it, then there should be no or very little taxes to pay. However, if they received the home by gift or if they hold onto the home for years before selling it, they could pay capital gains taxes. But if you choose to sell your home yourself, you can exclude $250,000 of gain ($500,000 for married couples filing jointly), when you sell your personal residence under Section 121 of the Tax Code.
Time and Timing
If you decide to sell your home, you can pick the time to do so, and hopefully get the price you want. But if your children feel compelled to sell the home in the event your untimely death, they may be forced to sell quickly and get less than full value.
Regardless of whether your children keep your house or not, they would have to deal with cleaning, de-cluttering, repairs, and renovations. Unless you’ve been diligent with downsizing, you may be leaving a lot of work for your children, who may also have jobs and families to care for. You, however, may be in a better position to make your house move-in ready for your children or whoever buys the house.
The Here and Now
It’s important to plan for your future, but estate planning is about the present, too. You probably don’t want to spend all your golden years planning for the time when you won’t be around!
If you don’t want to keep and care for a big house, you could still maximize the inheritance you are leaving to your family while enjoying your life. You could sell your house and buy a smaller condo, while putting the remaining money in a trust to take care of your expenses while you relax, take up a hobby, explore the world, or spend your time focusing on volunteer and charity work. The trust can then be left to your family when you are gone someday.
A Guilford County will and trust attorney can help you create an estate plan that fits your present needs and your desire to leave something for your children. We can help you understand both the laws that govern your property and the relationships you want to preserve. If you’d like to speak to The Elderlaw Firm about creating an estate plan that is tailored to your needs, simply call our Greensboro law office at (336) 378-1122 to set up a consultation.