There are a lot of circumstances to be considered when thinking about whether or not you should leave your home to your kids when you die. It might be right for some people, but you should at least consider the following 17 reasons why it might actually be a bad idea.
Sibling Disputes
Investopedia discusses several ways to minimize the risk of disputes over property inheritance, but one key way is simply not to leave your home in your inheritance at all. Selling the home prior and distributing the money might be the easier option.
Tax Implications
If you sell your home before you die and pass the money onto your kids instead, there could be potential for substantial capital gains. It’s worth sitting down and doing the math and then having that conversation with your kids before you automatically leave your home to them.
Divorce Complications
A few complications may arise surrounding inheriting property if you are divorced, so think about that when writing your will. You don’t want to end up risking leaving part of your estate to someone that you don’t feel deserves it!
Market Depreciation Risks
You only pay tax on any profit you’ve made on the property, but be sure to consider the cost of any depreciation, too. Your home might not be worth as much as you think it is, so it’s always best to get a valuation before you put it in your will.
Locked Up Equity
Times are tough for retired people. It might be a better idea to sell your own, downsize to a more affordable place to live during retirement, and put some money aside to look after yourself when you’re living off of your pension.
Needs of a Surviving Spouse
Do you have a surviving spouse, and have you carefully considered their needs before you leave your property to your kids? There’s more to it than that as you do have some legal obligations to your spouse with regards to their inheritance, so consider those too.
Unfinished Mortgage Payments
If you haven’t finished paying your mortgage, this might be a burden on your children if they inherit the estate. If you’re going to leave them a mortgage, the least you should do is talk to them about whether or not they believe they can handle the financial responsibility of inheriting it.
Children May Not Want the House
Have you ever considered that your children may not actually want your home? Their nostalgia for the family home may not match yours, and they might actually prefer for you to sell it so that they can inherit the cash instead.
Reduced Mobility
Another reason it might not be in your children’s best interests to inherit your home is because it restricts their movement. This could impact their dreams of relocating or their careers. Talk with them about their long-term plans before you write them into your will.
Debt Risks
Have you ensured that all of the finances for your home are in order? When was the last time you checked the paperwork? The last thing you want to leave your children is financial complications with your estate that they have to clean up after you die.
Impact on Assistance Programs
Homeownership might affect your children’s ability to claim things like Medicaid and other benefits. As a result of claiming your home in your will, your children may actually pick up fines or worse, so it’s best to speak to a lawyer if you’re unclear on the matter.
Management Challenges
Managing a property can be hard work, as you probably well know! Consider whether your children have enough time to take on that new bulk of work. Hiring an estate manager if the home is worth enough can also be a good idea.
Estate Planning Complications
When your child inherits your home, it may complicate their own estate plans. Make sure to speak to them about what they want to do with their own home purchase and if inheriting your home would cause a problem. These are the questions you’ll need to ask.
Emotional Attachments
There’s also the very important matter of the emotional burden you will be putting on your children by leaving them your home. It’s not easy to go through the motions when they have such an emotional attachment to the property, and it may be best to relieve them of that.
Loss of Control
If you don’t carefully plan through the inheritance process, there is a real risk of losing control of it. Any legal issues you might run into when handing over the property could be very problematic and mentally taxing for your children.
Adverse Tax Consequences
There could be differences in the tax implications for your children when inheriting your property and receiving it as a gift. Make sure to sit with a solicitor and consider the two options carefully to work out which is going to be most financially beneficial to your offspring.
Better Alternatives Like Trusts
Another alternative to consider instead of leaving your property in your will is to set up a trust. These can often be the most effective way to manage and pass on your property for two reasons: they can make life easier, and they can actually save your child money if you pick the right one.
Up Next: 20 Things Your Boss Is Legally Forbidden to Ask of You
The workplace should be a professional environment free from discrimination and harassment. While employers have the authority to ask questions regarding legal work obligations, there are certain personal boundaries they cannot cross. Whether it’s an invasion of privacy or an unfair request, here are 20 examples of things your boss is legally prohibited from asking of you.
20 Things Your Boss Is Legally Forbidden to Ask of You
18 Things That Say You Are Middle-Class and Not Rich
The difference between the rich and middle class can be confusing, but the two couldn’t be further from each other in reality. In this article, we look at 18 signs that someone is middle class but not at all rich or wealthy.
18 Things That Say You Are Middle-Class and Not Rich
18 Most Dangerous Cities in the World (5 Are in America)
Across the globe, there are many places you don’t want to find yourself because of the crimes waiting to occur. Sometimes, even nature can be cruel to you. This is particularly the case in the following 18 most dangerous cities in the world, five of which are in America!