Many parents are interested in passing their family home to their children. Their home has many special memories and passing this on the next generation can be special. A clear estate plan can help a family pass along a home, vacation property, etc. to their children.
There are many ways in which parents can pass along a property to their kids. These include the following:
- Sell the home to your kids. Parents can sell their home to their kids at fair market value. If they sell the home to their kids at a bargain price it will be considered a gift and will have tax implications. Parents can also loan money to their kids to purchase the home, but they need to charge interest, but it’s usually at a lower rate than commercial lenders.
- Gifting to kids. Parents can gift a home to their children using an irrevocable trust.
- Revocable living trust. Parents can set up a revocable living trust where their children are named as successor trustees. A revocable trust can be changed during the parents’ lifetime and allows them to spell out how they want the property to be handled after their death. If their children do not want the property, the trust can sell it and distribute the proceeds.
A legal professional who is skilled in estate planning can help their client plan for the future. They understand that every family is unique and has different goals they want to accomplish. Some families may want to pass their family home or vacation home to the next generation and they can advise on the best ways to accomplish this task.