Like many Americans, your home is probably your largest asset. However, if you have children who have grown and moved away, you’re left with an empty nest, quiet and big. You may be torn between keeping the house and passing it to your children someday, or selling it. On one hand, it may be the biggest asset you could pass onto your children. On the other hand, you have your own immediate needs to consider, and maybe you’re not quite sure your kids could handle the house when you are gone. Before deciding whether to sell or keep your home, consider the following:
Your estate will not pay federal estate taxes following your death if your total assets are worth less than $11.2 million (individually), but there may be state estate taxes to deal with. Likewise, if your heirs keep the house, they will have to pay for upkeep, including property taxes. Property taxes increase as property values increase. While your children may want to have your house, they may not be ready or have the liquidity to pay the taxes.
Your children will also potentially have to pay capital gains taxes if they sell the house because it is not their primary residence. (If you sell your home and have lived in it for two of the last five years you can exclude capital gain up to $250,000 as a single individual and up to $500,000 as a married couple.)
Regardless of whether your children keep your house or not, they may have to deal with cleaning, de-cluttering, repairs, and renovations. Unless you’ve been diligent with downsizing, you may be leaving a lot of work for your children, who likely have careers and families of their own, which cuts back on the time they have available to work on your home. You may be in a better position to make your house move-in ready for your children or whoever buys the house.
The Here and Now
It’s important to plan for your future, but estate planning is about the present, too. You’re still alive, and you not only have needs, but desires and wishes. You probably don’t want to spend all your golden years planning for the time when you won’t be around.
If you don’t want to keep and care for a big house, you could still maximize the inheritance you are leaving to your family while enjoying your life. You could sell your house and buy a smaller residence, while putting the remaining money aside to take care of your expenses while you relax, take up a hobby, explore the world, or spend your time focusing on volunteer and charity work.
At Boylan Code LLP we have experience real estate attorneys as well as estate planning attorneys and we would be happy to help you determine the best course of action for your residence as well as any vacation or investment property you may own. We can help you create an estate plan that fits your present needs and your desire to leave something for your children. We can help you understand both the laws that govern your property and the relationships you want to preserve. If you would like to speak to one of our experts about creating an estate plan that is tailored to your needs, simply call (585) 232-5300 to set up your planning session. Be sure to indicate your preferred choice of our offices. We are conveniently located in Rochester, Canandaigua and Newark.