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By Holly Welles
Special to the Financial Independence Hub
You’ve recently encountered an important decision. Should you pass down your home to your family? Many people make this choice before weighing a few pros and cons. It’s essential to examine this situation from every angle. Otherwise, you may create an unnecessary and unwelcome problem for you and your loved ones.
Here’s a look at whether you should pass down your property:
1. )You could redistribute your Wealth
Here’s a central reason why individuals decide to pursue this process. While houses themselves don’t always appreciate, your land has likely accrued value over time: and your family can benefit as a result. That occurs because land as a commodity isn’t readily available. Many homeowners don’t own any assets more expensive than their houses. You can ensure your family gains more wealth by giving them your residence.
They’ll likely thrive financially if they take specific actions. For instance, they could sell your home to create a monetary cushion. They may even want to move from their current residence to reduce their expenses. In some cases, it’s smart to pass down your house so you can assist them in managing finances.
2.) You may cause issues between Heirs
It’s not guaranteed whether your heirs will find a way to manage this transaction. Various concerns may arise between them. It could create jealousy if you trust your home to one sibling or child. But if you divide your home amongst multiple heirs, disagreements over ownership can still happen. You may cause more problems than you originally anticipated.
You’ll also want to consider what may occur if you’re alive while this process takes place. You may have to face a few different scenarios that create difficulties for you personally. Make sure to choose a method that protects you. It’s always best to think about your interests, too. If you move forward with this transaction, take steps to resolve issues that may occur after you pass.
3.) You can downsize to a smaller place
As you age, it’s often harder to care for a large home. That’s why many older adults tend to downsize into a rental community. They don’t have to deal with the costly maintenance that tends to come with more expansive space. It may also be a more immediate experience for some families: if you have unexpected health issues that don’t allow you to climb steps, it’s likely time to find a home without an upstairs level.
You may be inclined to move out and pass down your house for these reasons. It’s often easier to complete this process than it’d be to sell your residence through an agent. Consider how quickly you want to downsize before you make any decisions. You should transfer this asset after you settle into your new home. Otherwise, you may endure a few unexpected hiccups.
4.) You may bestow an unwanted present
There’s always a chance that your heirs don’t want your house. They may not have time for the additional upkeep a home requires if they have busy lives. They’ll have to deal with various details even if they have no plans to keep your property for themselves. Your siblings or children may already have a lot to handle. As a result, they might view this transaction as a burden more than a financial opportunity.
Speak with your intended heirs before you make this decision. They need to have their say in the matter, too. You may ultimately choose to proceed with your original plans, but it’s always best to know what your heirs think. You may be able to come up with a better solution that works for all parties. For example, you could sell your home so you can give away any money you earn as a result.
Consider these points before you make any Decisions
It may seem like a smart idea to pass down your house. There are more steps to this process that you should think about before you make a choice. Alongside these points, it’s also important to consider any fees or taxes you’ll incur throughout this transaction.
Be sure to cover your bases to protect yourself and your family to avoid creating more problems than necessary.
Holly Welles is a real estate writer and the editor of The Estate Update. Her work on home buying, market trends and home improvement has been published by My Mortgage Insider, Homes.com and Porch.
