Leaving your Home or Estate in Your Child’s Name – Possible Tax Savings or An Inevitable Litigation?
Figuring out how to handle our estate after we pass away is a difficult subject. Many people do not have wills and avoid even thinking about their plans and wishes after they die – although here at SMP Law we highly recommend you do your planning. Please refer to our blog “Make Sure Your Wishes are Followed – Plan Ahead!” about estate planning.
Other people put their estate in joint names, such as in the case of adding their children to their estate to pass to their children after they die, in the attempt to avoid probate taxes. While the conversation might feel a bit more comfortable as the focus is on money, it is still not planning the whole picture so there can be important factors missed.
So the question is: Is this a smart way to save taxes or an inevitable litigation in the future that ends up costing a lot more than the tax savings?
To help SiMPlify this question, here are some factors to consider before putting your estate in joint names:
- What if you have more than one child – will the other children as beneficiaries contest the decision?
- What if one of your children has been helping you in any way? Doing your banking, taking care of your house, helping with a medical issue? How does the estate get divided?
- Is the division of your estate clear and your reasons for the division clear?
- Have you informed yourself of the tax consequences? For example, if a house is included in the estate, was it a gift?
- If your estate is left to your child(ren) have you planned for any matrimonial issues that they may encounter in the future, leaving their spouse the opportunity to benefit from your estate?
With these factors in mind, one thing is clear – if you decide to put your estate in joint names be sure to outline your wishes very clearly to avoid many of the challenges listed above.
How do you outline your wishes clearly? PLAN YOUR ESTATE AND DO YOUR WILL. Once again, please refer to our blog “Make Sure Your Wishes are Followed – Plan Ahead!” about estate planning.
Contact us anytime at SMP Law to help SiMPlify your legal matter at 905-565-9494 or email email@example.com if you have any questions or would like to book an appointment to meet and discuss your situation and how we can help.