|Don’t listen to your friends, LISTEN TO LAWRENCE….read on:
My home is in an Irrevocable Trust set up 7 years ago through your office. My friend transferred his home into his son’s name to avoid Medicaid and minimize taxes, legal fees, etc. Which thought process is correct? I’m with you.
I could write a book on this subject. Actually, I did! Please tell your friend to go on Amazon to order my book, PLANNING TO KEEP IT! See below for details.
However, I need to answer this question in one paragraph…so here I go.
Transferring the house outright to your son (or children) is usually the worst thing you could do. I am going to list the problems:
- Loss of control. No one should lose control of their house.
- Loss of property tax exemptions. Goodbye STAR, Enhanced STAR, and veterans exemptions.
- Loss of income tax deductions.
- Loss of your $250,000 capital gain exclusion and step up in tax basis upon death. In other words, there may be a HUGE capital gains tax to pay upon the sale of the property, either during your life or upon your death.
Putting the house in an irrevocable trust eliminates all these potential losses and costs much less than the losses above.
This is an important discussion. If anyone has more specific concerns about this, shoot me your questions for upcoming LISTEN TO LAWRENCE LETTERS.