The question of how to transfer property to a child is far more difficult to answer than it was years ago. The transfer of any real estate property is a legal and financial matter. An individual or family should always consult an attorney and financial advisor when considering transferring a home, cabin, land, or any other property.
The exact means for the property transfer is different and should be determined based on the exact circumstances. Contact a real estate attorney and financial advisor to decide on the best way to transfer property. Along with a consultation, use these other tips for a sound property transfer between a parent and child.
Avoid verbal agreements.
Parents and children should have many conversations when considering a property transfer. Some of the discussions should be between the parent and child who want to transfer the property. If there is agreement on the transfer, the property transfer should be documented as a legal property transfer to the child. This can be done through estate planning, such as via a will or trust, or with a deed. Verbal statements such as, “when I die, you get the house” likely will not withstand legal challenges and is not a guarantee that the child can take ownership of a property.
If there are other children or family members involved, it is recommended that other conversations occur. The transfer of a property, such as a family home or cabin, can affect other members of the family both emotionally and financially. Open communication with other family members can minimize any drama that could arise in the future.
Consider the options and timing.
There are many different ways to transfer property to a child. The transfer can occur as part of a trust, either as a revocable or irrevocable trust. A will is another estate-planning document that can clearly spell out the desire for a property transfer to a child. The transfer can also occur via a legal property deed transfer. In addition to the exact means of transfer, the timing of the property transfer also needs to be factored into the decision.
Property transfers, both immediate and via estate planning, comes with financial implications. For example, if the property transfer is made from a parent to a child with significant debts, the transfer can lead to issues because the property is now considered the child’s asset. The timing of the property transfer, either now or in the future, can affect the finances and costs of both parties.
Consult the professionals.
With so many aspects to consider, a property transfer should always occur with advice from the professionals. The property transfer should be documented legally by an experienced real estate attorney, both for the protection of the parent and the child.
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