For many parents, passing their home and property on to their children is an important part of providing for them, especially if they can do so while still alive. After all, you can live in your home, provide your children with a paid-off asset and reduce inheritance taxes all at the same time. However, according to New Jersey estate planning attorneys, this is not without risks:
- Medicaid: Medicaid provides financial assistance to help pay for long term care, something which costs on average $70,000 a year, with most people requiring at least two years of care. While transferring your assets can provide you with some Medicaid asset protection, it can also increase your risk of being refused aid. That’s because this program has a five-year-look-back period in which they include gifted assets in your evaluation. This means you may be ineligible for Medicaid when you need it most.
- Security: Putting a significant asset like your home in the hands of others does put you at risk of losing the asset entirely. For example, if your child gets divorced and his or her ex-spouse has a claim on the property it could be lost or cost you significantly in divorce proceedings. Similarly, should your child gets into debt, the property may be used as collateral to settle, leaving you homeless.
- Conflict: Inheritance can cause conflict in the best situations and leaving property to children is no different. This is a very valuable asset and, especially if you have more than one child, this inheritance can cause contention about who deserves the property, who needs it more, whether it should be sold or not and so on.
Estate planning attorneys can give you options to provide for yourselves – and your children
Fortunately, transferring your property to your children is not the only option for achieving your estate planning goals. Utilizing the expertise of an attorney will ensure you draw up a solution which meets your needs and provides for your children the best way possible. This may take the form of a more specific Last Will and Testament which divides your assets fairly and avoids lengthy probate, a Living Trust where an executor will ensure fair division and use of assets, or an estate plan which ensures you have maximum Medicaid asset protection and preserves your assets for your children.