[ad_1]
The elder law attorney, one of the questions I am most frequently asked is, “Should I transfer my home my child?” My answer is always the same, “It depends on the goal you are trying to achieve.” This article will discuss some of the issues you need to consider before you decide whether to move the world to a child.
When you transfer your home to a child nominal consideration as One ($ 1.00) Dollar, you are essentially gifting the property to him or her. At the moment you sign the stronghold you no longer have your home. Your child is now called the owner. If you continue to live in the property and you have a falling out with your child, he or she can take legal action to have you removed from the property and then sell it. Also, what happens if your child gets financial problems and creditors obtain a court against him or her? The Court can act as a lien on the property, and creditors can force a sale of assets to satisfy the judgment. If you are still living in the property at the time, you will be forced to find another place to live.
moves in a child can cause him or her having to pay capital gains tax when the property is sold. When you move the property child, her or it takes a tax basis in the property. The tax base is generally the purchase price of the property, plus the cost of any improvements you made to the property at the time that you own it. When your child sells the property, he or she must pay capital gains tax on the difference between the sale price and the tax basis of the property. Currently, long-term capital gains tax rate is 10% to 15%, depending on the tax bracket.
An exception to the above rule if the child is living in the property for two (2) of the last five (5) years before he or she sells. In that case, the property will be considered a primary residence of the child, and there will be no capital gains taxes for as long as the profits of the Child on the sale of the property is more than $ 250,000. This amount increases to $ 500,000 for a couple.
If you do not export your child during your lifetime, but instead, he or she inherits the death, the child will get step Set the tax basis of the property. The step up in tax basis is the fair market value (FMV) of the property on the day of your death. If your child sells the property, he or she will only have to pay capital gains tax if the property sells for more than its FMV. Your child will have to pay Pennsylvania inheritance tax at the rate of 4.5% of net estate website. This is significantly less than 10% -. 15% capital ratio of
If filing a nursing home becomes a reality for you, you can consider moving back to the child to keep from losing it to pay nursing home costs. As nursing home residents, you can apply for Medicaid benefits when funding has been finished down. For one person, this amount is usually $ 2,400.00.
When you apply for Medicaid, the Commonwealth of Pennsylvania will look back three (3) years to determine whether you have performed any resources without fair consideration. If you are, you will be ineligible for Medicaid for a period of one (1) month for each $ 5,787.38 transferred from the date of the transfer. For example, if the FMV of your home is $ 100,000 and you transfer your home to your child in December 2004, you will be eligible for Medicaid seventeen (17) months, or until May 2006. Therefore, you need increased funding to pay nursing home costs of seventeen (17) months where you do not qualify for Medicaid.
In the above situation, if you transfer your home to your child and then die in nursing to become eligible for Medicaid benefits, the Commonwealth of Pennsylvania will not be able to use the asset to collect their claim for the amount of Medicaid benefits they paid to the nursing home. However, if you do not transfer to children’s homes and then die in a nursing home, the Commonwealth will be able to use the property to satisfy its claim before your heirs get nothing.
In determining whether to move the world to a child, you have to ask yourself, “What goals am I trying to achieve?” Such transfers may be good or bad idea for your answer to that question. This article has examined some things you need to consider before making your decision. It is not all-inclusive review. Depending on your specific situation, but factors in this article may need to be amplified, or other factors may be considered. As such, you should consult your legal advisor before deciding to move back to the child.
[ad_2]