A Question about Deeding a home to children
I think you talked about this before but I want to make sure that my home is protected from probate and Medicaid. I’ve been told to deed my house to my children now. Is that a good idea? Elizabeth
Elizabeth, this is probably one of the top five questions we get and we don’t mind discussing this as many times as it take to get the word out. The answer to your question is NO!!!!! It is not a good idea for a number of reasons. First, the house becomes the child’s house and therefore subject to their legal problems such as divorce, bankruptcy and lawsuits. If that child has any legal problems, then you can lose your house. Also, I have had a few rare occasions when the child forcibly removed the parent from the home. Second, you are missing out on tax savings. Your child will no longer get the homestead exemption nor the freeze in property taxes you are getting if you are over the required age. Also, when you sell, you will get to protect up to $250,000 in gain on the property. However, when you give it to your child, you lose that exemption which is 27% of the value of the gain. Third, you will be penalized for the full value of the transfer by Medicaid if you need to apply within the next 5 years. There are much better options to get the property to your children. Make sure you get good solid advice before you do any type of deed on your home. Make sure the person knows the tax and public benefits before doing your deed.
About the Elder Law Practice of Whatley and Elrod:Elder Law Practice of Whatley and Elrod is Arkansas’ largest Elder Law practice, with five locations through the state of Arkansas, in Bryant, Fort Smith, Springdale, and Bentonville and Hot Springs Village. Todd Whatley and Justin Elrod, the managing partners at the Elder Law Practice, are committed to serving the legal needs of the elderly in Arkansas. Their services include estate planning, creating wills, trusts, avoiding probate, special needs trusts, Medicare, Medicaid, and more. The Elder Law Practice of Whatley and Elrod also focuses in VA benefits, assisting Arkansas veterans in getting the benefits and assistance that they have earned during their time spent serving our country.