Should I Transfer my Home to My Children?

By Ann E. Salek, Attorney at Law
Critchfield, Critchfield & Johnston, Ltd.

Clients often ask me if they should transfer their house to their children. My typical response is: what do you want to accomplish by transferring your house? Their answer dictates whether they should transfer their house and to whom they should transfer it. However, rarely do I ever recommend they transfer the house outright to their children during the client’s lifetime.

If a goal is to avoid the probate process upon death, the client can execute and record a “transfer on death” affidavit for their house. Upon the client’s death, the house will transfer to the beneficiary named in the affidavit and will not need to be “probated.” If there is just one beneficiary, this is an ideal procedure for avoiding probate. However, the client should know that if they name several beneficiaries there may be some pitfalls. In order to sell the house, all beneficiaries must sign the deed and their spouses must sign the deed to release their dower rights. This can become cumbersome and difficult if there are several beneficiaries and spouses and not everyone agrees to the sale.

If a goal is to protect the house in the event the client needs long-term care (assisted living or nursing home), then I often recommend transferring the house during the client’s lifetime. However, I do not recommend transferring the house outright to a child. Instead, I recommend transferring the house to a trust with a child named as trustee and/or beneficiary of the trust.

If a client transfers the house to a child, that house becomes susceptible to the child’s issues. For example, if the child gets in an accident and gets sued, the house is then susceptible to the child’s lawsuit. If the house is transferred to a child and that child gets a divorce, that house can be susceptible to the child’s divorce. If the house is transferred to a child and that child dies, the house transfers in accordance with the child’s estate plan (possibly to the child’s surviving spouse). Furthermore, if the child needs to apply for any needs-based benefits (even completing a FAFSA form for financial aid for college), the house is counted as the child’s asset in determining whether that child qualifies for any benefits/aid.

Transferring a house to a trust will also avoid probate. The goal for transferring the house may be to protect the house in the event of long-term care needs. However, an ancillary benefit to the trust is that the trust will avoid the probate process upon death.

There are definitely reasons to transfer a house out of the client’s name. However, rarely should a client transfer the house outright to the child during the client’s lifetime. Clients should determine their goal for what they want done with their house and then obtain advice regarding what the best method is for obtaining that goal based on that client’s individual circumstances.

Ann E. Salek, Ohio State Bar Association Certified Specialist in Elder Law, and Estate Planning, Trust and Probate Law Critchfield, Critchfield & Johnston, Ltd. Attorneys at Law
4996 Foote Road, Medina, OH 44256 330-723-6404 • www.ccj.com

Opinions and claims expressed above are those of the author and do not necessarily reflect those of ScripType Publishing.