Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Since you've been his friend for 28 years, you most likely know why he has so much debt. Is it because of bad decisions or horrible spending habits? If it's the latter, I don't think it's a good idea to give him your home because he isn't going to learn his lesson. You would be enabling his bad behavior. Be a dear and get him a financial advisor while you're still alive.
Just leave him the house in the will. He inherits at the updated basis, so he won't owe any taxes on it at all, not for the amount your house is worth.
I suggest that you make an appointment to speak to an estate planner. I'm not qualified to give tax and estate advice.
Since you've been his friend for 28 years, you most likely know why he has so much debt. Is it because of bad decisions or horrible spending habits? If it's the latter, I don't think it's a good idea to give him your home because he isn't going to learn his lesson. You would be enabling his bad behavior. Be a dear and get him a financial advisor while you're still alive.
That's a good idea.
Also, Miss Hepburn, have you taken into account that you might live long enough to have to go into some kind of care home before you die? For those of us not leaving behind spouses and children, we can't just assume that we won't be spending down much or all of our "wealth" before we die unless we have a ton in the bank.
If you are comfortably well off at this point, it might be, as Pinkmani suggests, a better thing in the short and long run to help your friend manage his money better. In the future, there will still be time for you to make additional gifts to him. In the meantime, just put him in your will as inheritor of your house in case something untoward happens. But don't tell him. It could possibly change your friendship in ways you can't even imagine. And it doesn't do him any good to know. I'm in my mother's will as inheritor of her house and its value has changed so drastically in the time I've known that it's crazy and helps me in no way in my planning for the future.
That's a European term, rarely used in the US anymore. Perhaps you're thinking of a Living Trust? That might be one way of doing this, but it may not be the simplest, and probably won't be the cheapest.
.
Those are exactly the terms used in my state. And the states bordering.
It is inexpensive......I believe we paid $85 to our attorney..........and $1.00 to City Hall. No stamps.
When the time comes, it's $25.00, one death certificate...and you fill out the paperwork at City Hall.. go with two forms of ID....for the notary. Again, no stamps.
The house passes through this vehicle outside of a will or any trust.
That's a European term, rarely used in the US anymore. Perhaps you're thinking of a Living Trust? That might be one way of doing this, but it may not be the simplest, and probably won't be the cheapest.
MissHepburn: Here's an important point to remember. If the paperwork is done properly, your friend will inherit this home at what is called the "stepped up value". That means that he inherits it at the appraised value on your date of death (or one year after the date of your death). Why is that better? Because you purchased the home (I assume) some years ago. Presumably, it has increased in value or will increase in value before your death. If he inherits it improperly, it could result in him having to pay taxes on the capital gain since the date YOU purchased the home - eliminating that stepped up value.
Under NO CIRCUMSTANCES should you change the deed while you are still alive. No way, no how. And frankly, I'd seriously consider if you even want to tell him about this gift.
No "Life Estate" is still used in some states - and it is exactly what Miss Hepburn does NOT want to do. At least as I understand her intentions.
At least in my former state (NY) it meant that the OP retains ownership of the house, but her younger friend is permitted to live there for his natural life. He has the ability to to live there, and to invite others to live there as well. He can't sell the house. Make changes to it. He is not responsible for bills, maintenance and up keep. But he can live there.
There are places where a life estate are appropriate. This is not one.
I'd just see an estate attorney and leave the house to him in your will.
While you are still alive, Miss Hepburn, I'd attempt to school him in the ways of home ownership. What he can expect, his responsibilities, etc.
I think you are doing a nice thing.
And yes UNDER NO CIRCUMSTANCES should you change the deed while you are still alive.
I did a tax seminar once and, if everyone is on the same page, referring to parents, children, "sell" the house to the kids (or whomever gets it) and "rent" it back from them. You have to show some transfer of money so they can make mortgage payments to you and you rent payments to them - can't be exactly the same. Then no estate taxes.
Where should I go... an Estate planner, real estate attorney or attorney, period?
Thank you all again. xxoo
An attorney who specializes in estate planning. Not a Real estate attorney or general practice attorney if you want this done properly. And I agree that a Revocable Living Trust may be the best way to do this, but not necessarily the cheapest.
I do not think that an online DYI will is appropriate in your situation unless (maybe) you have zero living relatives who might contest (like neices, nephews, siblings, even cousins).
I did a tax seminar once and, if everyone is on the same page, referring to parents, children, "sell" the house to the kids (or whomever gets it) and "rent" it back from them. You have to show some transfer of money so they can make mortgage payments to you and you rent payments to them - can't be exactly the same. Then no estate taxes.
That's only if everyone is on the up-and-up.
I sure hope that you didn't pay for that tax seminar...because you received some lousy tax advice. Heck, that's terrible advice in general.
Don't do him any favors that could come to bite you later. You may need the property or it may be seized if you have to be put in a nursing facility permanently. Or you may need to do a reverse mortgage at some point.
If you are that well off then just buy him a home instead.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
