Estate planning is a thriving business these days as Baby Boomers are retiring and aging at lightening speeds. Being that the” family home” is likely the single most valuable asset Boomers own, chances are that the family home will take center stage with most estate planning processes.
Remember that there are two sides involved with giving and receiving family homes and you as agents can be very helpful to both sides. Let’s first attend to the givers.
The Boomer givers have essentially three ways of dealing with the family home. They can sell the house, downsize to a smaller one and leave a larger pot of cash to their children and grandchildren. They can deed the house to their heirs in order to avoid children/grandchildren squabbling in the future. And they can opt, as many do according to the AARTP Public Policy Institute, to simply gift the house without downsizing.
The standard way to give the family house is through a will. Wills work best when all the potential heirs get along and when whoever is chosen to be the executor of the will lives in the same state as the house. When the heirs don’t get along (about 5-15% of total estate assets go to probate expenses in court when the heirs squabble), experts such as Victoria Fillet Konrad, founder of Blueprint Financial Planning in Hoboken, NJ, suggest that, “…if you’re looking for a smooth transition from one generation to the next without fights and without high costs of probate, it’s best to set up a trust.”
Agents may encourage their Boomer clients to seek legal advice prior to their making any decisions about these various gifting options and about any potential estate and gift tax exemptions and health care savings that may apply.
Now, let’s attend to the recipients of the family home, the adult children and the grandchildren.
Some receiving heirs both expect and accept the family house straight away when their Boomer parent(s) give it to them….whether they want to or not and whether or not they can afford to take it.
An inherited house is more than a symbol of growing-up family life. It ‘s an asset just as is an inherited stock. You, as the levelheaded, non-emotional agent, can help the receiving heir see the family home as an asset. You, as the agent, can help the receiving heir seek legal advice about accepting the house, living in it, selling it, renting it and/or not accepting it.
There are tax implications, capital gains implications, mortgages and/or liens that may be attached to all these various house options. You, as the agent, can help facilitate a solid, guilt free referral to a qualified tax attorney.
It truly makes sense to look a gift horse in the mouth when on the receiving end of the family house. You, as an agent, can help the receiving heir do just that…look at the gift horse and the gifted family house with qualified legal and real estate advic
