So You Want Your Child to Have the Family Home…
August 17, 2016
It seems to be a common theme. Adult child lives with parent. Maybe this is for financial reasons, or perhaps the child is acting as caretaker. Parent wants child to have the home at the time of the parent’s death. If the proper planning isn’t done, however, it’s very unlikely that the transition of the family home to the child will go smoothly or that it will even happen.
So why is this situation so problematic? Usually, because there are competing interests at stake as well as a lack of communication and planning. Let’s say mom has three children. Commonly, the children bring differing economic means and interpersonal dynamics into the equation.
What are mom’s goals at her death?
- To leave the home outright to the child, regardless of its value?
- This can be done through her will, trust or with a Transfer-on-Death Deed.
- To make sure all three children receive an equal share of her estate?
- Are there enough estate assets to equalize the other children if she distributes the home to the child?
- If not, can the child qualify and afford to finance 2/3 of the home’s value?
- This planning is best done through her will or trust, providing a first right of refusal or by stating how the individual assets should distribute.
- Who are the players? Will mom’s personal representative or other estate fiduciary have competing interests?
- If mom dies without a will (intestate), and her wishes aren’t in writing, it’s very likely that the other children will be wanting their share of the estate sooner rather than later and they will lack the patience to allow the child to secure proper financing.
I can’t stress enough the importance for mom to get a plan in place. This does not have to be a costly endeavor. Half the battle is communicating openly with all of her children about her wishes, and then the home can end up in the right hands.