Deciding what to do with your home after you pass away is a significant decision. While leaving your home to your children might seem like a natural choice, there are several reasons why this might not be the best option. Here are 12 things you need to consider first:
Potential Family Conflict
Leaving a home to several of your children can lead to disagreements about what to do with the property. They might start to argue over whether to sell, keep, or rent out the house, potentially straining family relationships. If you have more than one child, put a plan in place that will protect not only the value of your home, but protect the family bond between your children.
Financial Burden of Maintenance
Owning a home comes with ongoing maintenance costs and property taxes. If your children are not financially prepared for these expenses, the house can become a financial burden rather than a blessing. Talk to your kids about potential pitfalls and what to do if the worst should happen. They’ll thank you for it in the end.
Unequal Distribution of Assets
If one child gets the home and others receive less valuable assets, it can lead to feelings of unfairness and resentment among siblings, causing much damage to the family bond. You should always ensure that your children are being treated fairly, and maybe even have a talk about what they can expect once you’re gone. If one child takes care of you during old age, it may of course be fair to leave a larger inheritance to that child as a thank you.
Complicating Your Child’s Divorce Proceedings
Believe it or not, your child is going through a divorce, and inheriting your home could actually complicate their divorce proceedings. The house might be considered in the division of assets, potentially leading to legal challenges. So keep this in mind when drawing up your will.
Impact on Your Child’s Tax Burden
Inheriting a property can increase your child’s tax burden, particularly if the value of the home has appreciated significantly since you purchased it. Consider your children’s finances before making any big decisions and maybe include them in your thoughts so that you’re all on the same page.
Limiting Your Child’s Mobility
Owning a home may limit your child’s mobility for job opportunities or personal preferences. They might feel obliged to stay in the area because of the house. Ask them if they intend on staying at the house or if they have plans to sell. Their answer may also influence your decision.
Risk of Debt or Liens Against the Property
If your child has debts or financial issues, creditors could place liens on the property, putting the home at risk. You don’t want to complicate things further for your children, so ensure that you only leave your house to your kids if there is no considerable debt to be paid.
Ineligibility for Certain Assistance Programs
Owning a home could make your child ineligible for certain types of financial assistance or benefits, depending on their individual circumstances. It’s important that you are aware of their financial situation before leaving any large estate in their name.
The Burden of a Large Asset
Managing a large asset like a house can be overwhelming, especially if your child lacks experience in real estate or property management. It’s best to hire a lawyer to go through the specifics of taking over a large asset, so make sure you have covered this in your will. You’d want to ensure the house you leave behind is being managed in the best way possible.
Potential for Market Depreciation
The real estate market can be unpredictable. If the market value of the house depreciates, it might not be the financial asset you hoped to provide for your child. Do some research before deciding whether you want to leave the house in your will. It may also be wise to sell beforehand, ensuring that your children won’t have to deal with such big complicated transactions.
Impact on Your Child’s Estate Planning
Inheriting your home will affect your child’s estate planning. They will need to consider what to do with the property in their own estate plan, which can be a complex and difficult decision. Seek advice from a professional so that both you and your child have a full understanding of what to expect if they were to inherit.
Personal Attachments and Memories
While a home is full of memories, it might also be difficult for your child to repurpose or sell it due to emotional attachments, which could hinder them from making practical decisions about the property. Your child might feel guilty about selling the home they grew up in, so if you want to relieve them of this burden, tell them. On the other hand, if you do not want your children to sell, ensure you communicate this as well.