You can give your adult child your home tax-free

[amastewa93]

Before the days of income and estate taxes, adult children often just moved into the family home after their parents died. Unfortunately, it’s not that simple anymore.

There are several ways to give a home to your child. And a few are tax-free. But to get the best tax results, you’ve got to plan ahead...

I thought this article from MarketWatch had some good tips and pointers if you want to "gift" your home to your adult child. Have any of you considered doing this? I don't have kids yet but having this option later in life may be good. Thoughts?

[Thrif-t]

We have a TOD (transfer on death) on our deed, goes to all 3 kids. Avoids probate, they inherit free and clear, and can sell it and divide the money between them.

[kork13]

Pretty sure any old trust can serve the same end (avoiding probate & taxes). I don't know exactly how the taxes go with the trust, but my understanding is that's my father's plan for both of his homes (rental & primary). He mentioned recently that he's going to see an estate attorney soon (before he retires, which will likely be in the next year or so), and get all of that sorted. I don't really see the point though... As long as your estate doesn't exceed the $5M+ limit, there's no need to get fancy. I'd just as soon leave everything as-is, and just handle things via the will. However, the TOD idea also seems very clean & simple (not personally familiar with it).

[Thrif-t]

I'm not sure if the TOD is a new Ohio thing? Don't think it was around 10 years ago.

[kork13]

I did some quick background research on TOD's and apparently they're actually decently common. It basically acts the same as transferring a property via a will, but it just skips the probate by immediately placing the property in the name of the beneficiaries. It's still subject to the estate tax limits, but it's just a cleaner method of doing it. Not all states allow it, but 20-ish do, including both states where my father has real estate (OR & FL)... So I might discuss with him about using a TOD instead of a trust, since it seems to be a more simple answer to the 'avoid probate' intent.

[Thrif-t]

I can attest that it's speedy. I had an older co worker who died end of Oct. Had a TOD to her niece on the house and the house was sold as of Jan 1st! No waiting around.

My inlaws have their house transferring to their trust upon death, not sure what all we have to do to be able to sell it, I think some kind of affidavit?? Why it passes to the trust and not in the trust name to begin with, who knows?

[amastewa93]

These options are really interesting (for me) to learn about. My parents don't own their homes. After they separated and we lost our home they have always either rented or (now) their partners have the home in their names. So I don't believe I'll have any of this to worry about. But... if I have kids at some point, it is definitely something I'd want to look into.