Most people that I know are fairly normal, regular people.  They aren’t rich, and they aren’t poor, but they are somewhere in the middle.  They own a house, have a few kids, and generally just go to work, pay their bills, and take a vacation every now and then.  I am one of these people, and so I understand how this type of life works on a regular basis.  Sometimes we are called “middle class” or “middle Americans.”  I like to think we are able to live a comfortable life, not need to get too involved and have everyone else criticize us for how we live our lives, but also with enough to pay for food, a house, and a way to get around…and maybe even save a bit for retirement!

For those of us who are in this situation, and for most people, their house is their single biggest – or single most valuable – asset.  A house is something generally purchased when someone is starting off in life.  That is part of why 30 year mortgages exist, so that a person can pay off a house over an extended period of time, and not need to come up with all of the money all at once.  Instead, if you are anything like me, you purchase a house, and start making regular payments.  Over time, you pay down the balance due on a mortgage and build up equity in the house.  Of course, it doesn’t hurt that houses tend to go up in value over time.  My house has almost tripled in value over the last 12 years I have lived there, and my parents’ house has gone up in value over 8 times what they paid for the house almost 30 years ago.  This means their house is quite valuable, but my parents did not pay for the full value of the house now, just for what they purchased the house for almost 30 years ago.

If you have lived in your house for a long time, you likely have experienced something similar…you paid the mortgage, kept up on the house by making repairs, or improvements, and eventually you have a paid off house and a bunch of equity in the house.  You get to live in your own house, and do what you want with the house, but at some point, you will either no longer be able to live in the house safely, or you will no longer be able to live in the house at all, because you have passed away.  At that point, your house will likely pass on to your surviving spouse, or if you do not have a surviving spouse, then on to your kids.

 

What Will the Kids Do With the House?

At that point, your kids are probably most concerned about what to do with the house, and how to sell the house.  Although it seems like a very wonderfully romantic and nostalgic idea, not many kids have the ability to hold onto a house their parents once owned and also have their own house…the equity an homeowner has built up is a tough thing to spend if the house is not sold, as most people will not accept payment in the form of shingles taken off the roof of a house, or paint scraped from the wall and characterized as “equity” from the house.  Instead, most kids will end up selling the house, and you want to make that easy for them.

 

 

Tip #1 – Make it As Easy as Possible for the Kids to Sell  the House 

You want to give your kids the ability to sell the house as soon as they can.  A house that sits vacant can develop problems with the house – water damage, a broken window, a burst pipe, or unkept lawns that lead to various plants overtaking an otherwise wonderful house can all occur if a house sits vacant for too long.

 

 

 

Tip #2 – Working With an Experienced Estate Planning Attorney  Leads to the Best Outcome

There are many ways to get a house to the kids, and have them be able to sell the house.  A will can give the named personal representative the ability to sell a house even while the probate process is ongoing.  The personal representative can sell a house in the middle of the probate process. If your house is tied up in probate you can still sell the house, you just have to hold onto the money until it can be distributed later during the probate process.  A beneficiary deed transfers ownership to the kids, and does so quickly, and even without probate in most cases.  A trust can give the Trustee the ability to sell a house out of the trust.  Which approach is best really depends on your own situation and all of the circumstances involved, so you really want to work with an experienced estate planning attorney to decide which approach is best for you.

 

 

Tip #3 – Not Everyone Needs Asset Protection from Lawsuits or Long Term Care Costs

Asset protection trusts are certainly an option to pass your house on to your kids, but they are not always necessary, and they can be expensive.  Asset protection trusts are usually in the $3,000 – $5,000 range to set up, and usually involve turning control of the house and property over to a child, or someone who is not you.  Those two facts alone can deter people from wanting to set up an asset protection trust.

For those you want to engage in asset protection, it certainly can be done, but there are timing issues to consider, as there is usually a 5 year lead time needed to get protection for long term care, which is Medicaid’s time frame for assets to be protected if you move the assets out of your name.  As such, most people just want to make sure their kids get the assets, and are less concerned about protecting them from lawsuits and long term care.

 

 

Tip #4 – Be Sure of What You Want and Write it Down to Make Sure it Happens

You need a written estate plan for your house to go where you want it to go.  A will, trust, or beneficiary deed should specify who gets the house and when they get the house.  You want to make sure your house goes where you want it to go!  Since your house is usually the biggest single asset you have, you want to make sure your estate plan is as clear as possible about who gets the house, and when they get the house.  That way, the house you spent so much time paying for and setting up just like you want it to be, does to who you want and benefits them.  You want your hard work and house to benefit whomever you choose, not just anyone out there.  To make an appointment to discuss how to make sure your house goes where you want, you can click the link below.