Tag Archives: transfer

Estate Planning

Why You shouldn’t Transfer Your House to your Child

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If your home is your primary asset, you may believe you can accomplish your estate planning goals by transferring ownership of your house to your child while you are still alive. Although this can keep your house from going through the probate process, it can also create significant issues such as:

  • Transferring your house while you are alive means that you will lose any property discounts that you are eligible for (many states offer discounts to persons over 65) which will result in an increase in your property taxes. Some states also charge a fee for every transfer. Not understanding this can be very costly to you. Depending on your financial situation, this could get you into tax trouble.
  • If your child has had financial struggles, transferring your house to him or her could put it into jeopardy. Once title to the home is in your child’s name, it becomes vulnerable to your child’s creditors and other legal troubles. What if your child files bankruptcy? Your house is their asset!
  • Although you may have a strong relationship with your child, nobody knows the future. If you were to have a falling out, your child will not be legally obligated to allow you to continue to live in your home without a lawsuit.
  • If you have more than one child, transferring title of your home to only one child can cause sibling rivalry and disputes. However, putting all of your children’s names on the title to your home can also cause fighting if they can’t agree on what to do with it. Having numerous names on the title can also make the home vulnerable to all of their creditors.

The transfer of title to your children is subject to the federal gift tax. While it may be exempt from payment of a tax (depending on the size of your estate), it still requires filing of a gift tax return.

You could lose the step-up in basis under the tax laws which means your children pay income tax on the future sale of your home.

Your creditors can still set aside the transfer to your children. The Fraudulent Conveyance Act protects creditors where you transfer assets without adequate consideration.

It is important to remember that even if you transfer your home out of your name, there are other assets in your estate that may still make a probate action necessary. If you hope to avoid probate, lower tax liability, and save you and your family money, contact us for an appointment. Creating an effective estate plan does not have to be expensive – let us help! To be perfectly honest, we almost never recommend transfer of a house to your children as a strategy to avoid probate or taxes. There are better and more effective tools.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

Estate Planning

Could Your Assets go to an “Unintended Beneficiary?”

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When you create an estate plan, it is important to pick your beneficiaries carefully. However, it is also important to understand that if one of your beneficiaries dies shortly after you, the assets you leave to that person will pass to his or her beneficiaries. For example, if you leave your estate to your second wife and nothing to your kids, but she dies a few weeks after you die and her will names her children from a prior marriage as her sole beneficiaries, your children will inherit nothing from you. Obviously, this is not what you would have wanted to happen.

How can you prevent this from happening? You may want to include a survivorship clause in your will. This provision requires a 90-day waiting period before any assets can be distributed to your heirs. You should also think about the relationship with the named beneficiary. For instance, in the situation where your beneficiary is a second spouse and you both have children from previous marriages, you should consider including a contingency that if your spouse (the primary beneficiary) does not survive you for a set period of time, then the remainder of your estate should transfer to your children (or other named secondary beneficiaries).

You should also consider leaving your assets in Trust. By using a Trust you can provide support and use of assets to your spouse, but when your spouse dies, the assets go to your children. In second or blended family situations, a Trust is often the preferred tool.

When you are creating your estate plan, it is essential that you ask the “what if” questions. We can help you with trying to anticipate the different scenarios you should plan for in your estate plan. If you have an existing estate plan, we can help you review your beneficiary designations and ensure that your assets will be distributed exactly how you want.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

Estate Planning

Should I Transfer My Home While I’m Alive?

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For many Utah residents (and for most people in general), their most significant asset is their home. In an effort to avoid the probate process, or save the money required to create an estate plan, many people transfer title to their house while they are still alive. In most instances, a parent transfers title to their home to an adult child, believing this is an inexpensive and simple answer. Sadly, this can lead to serious complications for you and your loved ones.

Two important factors to consider are that by transferring title to your home, (i) you lose your homestead exemption for protection from creditors, and you are no longer entitled to a reduced property tax because it is not an owner occupied primary residence. This can cost you thousands of dollars.

Another concern is that you lose control over the rights to your home. If you should have a dispute with your child, you could potentially lose the ability to live in your own house! Your child (or children) owns the house, and without providing more, he or she does not have a legal obligation to let you continue living there (unless otherwise provided by contract). Additionally, you have no control over what can be done to your property, such as renovations, but also with your home being used as collateral for loans. What happens more often is a child has creditor problems of their own and their judgment creditors then have liens on your home!

Finally, you should also consider whether transferring title to a child will cause problems at your death amongf your other children. The child that owns your home has no legal obligation to share it with his or her siblings. What happens at death when that child faces the other children and simply states that he doesn’t intend to share?

To remedy this, some people put the names of all of their children on a deed to their home. However, if you put all of your children’s names on the title to your house, it can make the documentation very complicated and it leaves the home more vulnerable to attack by creditors and even more complicated. For example, what happens if one of your children dies before you do? Who then owns their share of the house? And even if your children cooperate with you, will your inlaws or grandchildren? What happens if you want to sell the home and use the proceeds to buy a smaller home or for your support in old age? One holdout can jam up the works and you can’t sell your house! You can see that this creates serious complications and is never a recommended plan.

More often than not, the arrangement that sounded so simple becomes seriously complicated and costly and results in litigation in your estate. It is far more costly than preparing a sound estate plan. And the worst thing is, it doesn’t carry out your wishes.

Creating an estate plan is a safer, more efficient and less costly means for transferring all of your important assets. If you want to avoid the probate process, you can create a revocable living trust. This type of trust provides you with flexibility to decide when and how your estate is distributed. A trust can actually save your family a significant amount of money, time and disputes in the long run and you can be assured that your intent is carried out under all circumstances.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

Estate Planning

Can your Loved Ones Inherit your Frequent Flyer Miles?

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Airplane propellerIf you are somebody who travels a lot and you have accumulated a large number of frequent flyer miles or reward points, you know they are a valuable asset. Many people don’t think about including them in their estate planning efforts, which is a big mistake. With some aforethought and planning, you may be able to transfer your valuable loyalty program points to your loved ones.

Every rewards program is different, so each has its own rules that apply to transferring points or miles. The best approach for transferring the program benefits is to start giving them away while you are alive. If you are no longer traveling or you have more points accumulated than you will ever use, start gifting them to family and friends now. Many companies allow you to purchase airline tickets with your miles to be used by anyone. Additionally, you can use your points to buy gift cards, hotel stays or other benefits.

If you are still using your points or miles and you are not ready to gift them to others, you should create a list of your accounts, user names and passwords. This will allow your loved ones to access your accounts if you should die. Many companies that do not allow you to transfer points allow somebody who logs into your account to redeem points or miles.

You should also check into adding family members to your account. Some credit card companies that provide points or miles for every dollar you spend may allow you to add your spouse or other secondary user to your account. If you don’t want this other person to be able to make charges on your credit card, stick it in a safe deposit box with your estate planning documents. Once you pass, the secondary user may have access to your accumulated benefits.

Lastly, you should consider setting forth who you want to leave your program benefits to in your estate plan. Many companies will honor the transfer of points or miles if they are specifically transferred in a will or other estate planning document.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.