No matter your level of income, your home may be one of your most valuable assets. Unlike other types of assets -- such as pension plans, stocks and 401(k) accounts -- homes and long-held vacation properties have sentimental value as well. This can make them hard to let go when the time comes.
Whether you are thinking about the distant future or need to downsize in order to obtain Medicaid benefits, you have options. There are a variety of property transfer vehicles available, such as:
- Beneficiary deeds: Known as transfer-on-death deeds in other states, a beneficiary deed allows you to retain ownership of your property until your death. Upon death, it transfers automatically to those whom you designated in the deed. This type of deed may allow your home to
- Life estates: Granting someone a life estate in a property gives him or her the right to remain on the property until his or her death. You could grant your home to your children or other heirs and retain a life estate for yourself. This takes the property off your hands while allowing you to stay. You could also give a life estate to a partner or special friend. This would allow your partner to live in your house after you are gone until his or her death. Then, the property transfer to your designated heirs.
- Quitclaim deeds: Quitclaim deeds are used in a variety of circumstances. Essentially, a quitclaim deed grants whatever interest you have in a property to those whom you designate in the deed. Used at the wrong time, a quitclaim deed can trigger significant tax obligations.
Warning! Use with caution
Whatever you do, don't make a decision about your home without first consulting an attorney. Decisions about what to do with your home and other real estate assets should be made during the creation of your comprehensive estate plan. A misstep can create a tangled web of legal and tax problems for you and your heirs. A property transfer can also affect your application for the Medicaid benefits you need for nursing care.