A lot of people assume they can avoid the costs of estate planning by transferring the ownership of their home to a child or relative. After all, what is the harm in doing that? If you own a significant asset like a home, transferring ownership doesn’t protect that asset Most estate planning attorneys advise against transferring ownership, even if you feel it will save you money from estate planning.
There are numerous reasons for keeping your home in your own name, rather than transferring the ownership of it. Two of the biggest reasons include liabilities on the part of your child and your property taxes. Other reasons, however, include:
- Relationship Status – How close are you with the individual you’re transferring ownership to? Will they allow you to live in your home? Keep in mind that once they own the property, they can evict you.
- Children – How many children do you have? If you give the home to just one child, how will that impact his or her relationship with siblings? Negative feelings often arise from inheritances and transferring the ownership of a home to another child can only make these situations worse.
- Avoiding Probate – While transferring ownership makes you think you’ll save on the hassles of probate, there are safer, more effective methods. You can use a Revocable Living Trust, for example. These are flexible and reliable – and, they’re affordable. You can save your family more money and hassle just by creating a trust, rather than transferring ownership.