What You Need to Know About Leaving Your Home to Your Children
Here’s a common scenario in California: The biggest part of a person’s estate is the home, and he or she wants to leave it for his or her children after death. After all, the children may have grown up in the home and maintain a sentimental attachment to it—and as the parent’s most significant asset, the home is often the most valuable asset his or her children will receive.
Given how often that precise scenario plays out, it should come as no surprise that various methods of transferring your house to your children have been developed over the years. Some of those methods are excellent strategies for doing so, but others are of the sounds-too-good-to-be-true variety.
Let’s take a look at some of the ways you can leave your California home to your kids, and the benefits and drawbacks of each.
Option 1: Wills
The classic estate-planning document is the Will. A Will dictates what happens to your property after death. But it has some downsides: First, it requires going through the probate process, which can be expensive and time-consuming, especially here in California.
Second, if you had to rely on Long-Term Medi-Cal to afford a stay in a nursing home, a Will won’t generally insulate your home from the Estate Recovery program.
Option 2: Living Trusts
A living trust is an alternative to a Will that many Californians rely on to avoid probate. With this tool, you would transfer your home into a living trust that you control. When you die, the person you name as successor trustee transfers your home to whomever you said should get it—all without ever going to court.
Plus, by placing your home in a living trust, you remove it from your probate estate, which means Medi-Cal can’t touch it after you die.
On the other hand, living trusts tend to be more expensive to set up than the other options. However, many Californians find that the long-term benefits outweigh those short-term costs.
Option 3: Joint Tenancies
In a joint tenancy, you co-own your house with others—for example, the children you want to get it after you die. When you die, your interest in the house passes automatically to the co-owners.
That sounds nice and easy, but joint tenancies are a bad estate plan for reasons I’ve discussed before.
Option 4: Transfer on Death (TOD) Deeds
TOD deeds are very recent additions to California law. TOD deeds are deeds, which means you must file them with the county. If you die after filing a TOD deed for your house, your house will automatically go to the person you named in the deed.
But to change the person who gets your house, you must file a completely new TOD deed—it’s not as easy as changing a Will or living trust.
What’s the Best Choice for Your Home?
So, when it comes to transferring your home after death, you have some options—not all of them good. Ultimately, the best strategy for transferring your home or any other assets is to work with an estate planning attorney to create a comprehensive estate plan for yourself. If you’d like to learn more about what that looks like for you, give me a call so we can discuss your options in more detail.