17 Reasons Not To Give Your Home to Your Children When You Die

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By Jonathan Trent

Giving your home to your children when you die may seem like a good idea, especially if it is done with good intentions. While this may be your desire, it’s more complex than it seems; here are 17 reasons not to give your home to your children when you pass. 

Tax Implications

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Inheritance tax is when hefty tax bills are given to your children upon receiving your home after you die. According to Forbes, this could result in a significant chunk being removed from the pot of money that would otherwise have financially supported your loved ones.

Legal Complications

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Gifting your home to your children when you pass away can cause all sorts of legal issues. For example, there may be disputes over the ownership of the house or with regard to the transfer. If your child goes through a divorce or bankruptcy, the home could be at risk.

Loss of Control

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Transferring ownership of your home to your children means they have full authority to do what they want. Remember that this means they are authorized to make changes or adaptations to the property that you might not want! These renovations can also devalue your home for your children.

Financial Dependency

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In some cases, children may become completely dependent on the financial worth of your home. The Times explains that this prevents the next generation from having a fair chance—whether that be in education, employment, property, or any other opportunity.

Emotional Baggage

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Inheriting a family home can be seriously bad news in terms of emotional baggage. It keeps your children trapped in the past, making it difficult for them to move on and create their own independent lives. This is especially true if it is their childhood home!

Creditors and Liens

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If your children owe money to people or companies, creditors might place liens on the house, endangering its ownership. This means that your children’s debts could lead to the property being foreclosed upon. Maintaining ownership of the house under your name safeguards it from potential creditor demands.

Property Maintenance

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Maintaining a home is no easy job, especially if it’s large. Your children could find themselves in a difficult position if they do not have the means or desire to maintain the property, which could lead to the home falling apart or requiring further work.

Market Fluctuations

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There is no way to predict changes in the real estate market, which could negatively influence the value of your home, impacting your children’s financial stability. Ultimately, this means that economic downturns or housing market crashes can leave your children with a smaller inheritance.

Estate Planning Complexity

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Estate planning gets more complex if you transfer your home’s ownership, needing legal papers and taxes. Using trusts or other plans might let you control how your assets, such as allowing your property to be shared. So, it’s always a good idea to talk to an estate planning lawyer about such options.

Impact on Government Benefits

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Inheriting property could impact your children’s eligibility for government assistance programs like Supplemental Security Income (SSI). Owning the home might disqualify them from certain need-based benefits, so structuring the inheritance through a trust or other legal mechanisms could be worthwhile to safeguard their eligibility for government assistance.

Emotional Attachment

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The Guardian points out that gifting your family home to your child means you are no longer the homeowner and have no rights to the property, so it’s not a decision that should be taken lightly. This is especially the case when children have emotional attachments to a property, leading to nasty disagreements.

Unexpected Expenses

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Unexpected expenses can crop up when you give your home to your children after you die. For example, your children may have to deal with repairs, maintenance, and property taxes, and they may not be fully prepared for this. 

Lifestyle Changes

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You cannot predict the path that your child will go down after you die, and as their circumstances change, they may not prioritize looking after the home that you have left them. For example, if they want to move away, they could feel obligated to stay because of it, which isn’t fair.

Loss of Liquid Assets

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Inheriting a home means a big chunk of your children’s inheritance gets locked into something that cannot be easily turned into cash. Liquid assets, like money or stocks, are more flexible for your children’s financial needs, supporting them if they want to invest or pay for education.

Family Dynamics

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For families that are already experiencing tension or rivalry, this could be heightened if you pass your home on after you die. The New York Times highlights that divisions like this come at emotional times, as no one in the family really knows the best way to proceed.

Personal Preferences

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There is a high chance that your children may all have different housing preferences or lifestyles that don’t align with inheriting your family home after you die. It may be better to sell the property to suit your children’s individual goals and tastes or at least discuss it.

Potential Spouses

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Finally, inheriting your home after your passing might subject your children to unwanted interference from their new spouses, negatively impacting their future. The introduction of a new partner into the family dynamic can lead to disagreements over the management or ownership of the inherited property. It’s something to consider very seriously!