Through the year 2045, approximately $84.4 trillion will pass from one generation to the next. Baby Boomers hold the most money out of this figure, and their possessions, including their homes, are all part of the wealth they will pass on after they die.
If you are writing your estate plan, you many think about leaving your house to your children after you pass away. It’s a natural line of succession that makes sense; rather than have to buy another home, they can move into yours and keep the property for themselves, which will likely be paid off or have a low mortgage rate. Another option is that they can sell it and use the sale proceeds to build their own nest eggs.
Whatever the case may be, you want to ensure that your home is properly accounted for in your estate plan. Without the right documentation, family members can become locked in a legal battle to determine who has the rightful claim to your property.
Understanding Your Deed and Will
You can bequeath a home to someone, like your spouse or children, but if you do not update the deed before passing, then there can be serious consequences afterward.
In addition to not having clear homeownership, there can also be serious issues with potential tax liabilities that leave the person on the deed struggling to pay for a property.
Make sure that you discuss this with your heir(s) prior to writing your estate plan. It is vital that they not only understand the full responsibility of inheriting your property but that you are 100% certain they want to assume ownership in the first place.
You can add someone to a deed without removing yourself from the property, which is likely the best course of action if you plan to remain in the home for the rest of your life. Transferring ownership beforehand could quickly become a messy situation, like if your heir has the property seized.
Consider a Trust
You can work with an estate planning lawyer in New Jersey to create a trust that allows your property to transfer to the beneficiary after your passing. Your heir will not have to go to probate court after you die, and you can choose which child or children you would like to inherit your home.
In New Jersey, a spouse automatically inherits your estate if you pass without a will. Your property becomes theirs. If you have children together, the spouse still inherits everything.
The only way to leave your home to your children instead is to either add them to your will while you are alive, transfer the deed to them, or leave the home to them in your will.
However, there is a caveat: If you are within five years of applying for Medicaid, you could receive a transfer penalty. Certain exceptions apply, and it is important to consult with an estate planning lawyer in New Jersey prior to making any changes to your deed. They can help you make the most informed decision for your heirs while still protecting your current life and future.
Discuss Your Will With Your Loved Ones
No one wants surprises in a will, especially when that surprise means either finding out they’ve inherited a property they did not want, or realizing they are not getting a home they thought they would.
A part of the estate planning process includes having open discussions with your family, resolving conflicts, and reaching as much resolution as possible before writing your will.
Your lawyer can help you navigate the often confusing and difficult process of drafting a will and dividing your assets however you see fit.
If you would like to work with an expert estate planning lawyer, give us a call at 201-996-1200 to schedule a consultation.