Don't Gift Your House To Your Children

Michael Ruger - Greenbush Financial Group

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A common financial mistake that I see people make when attempting to protect their house from a long-term care event is gifting their house to their children. While you may be successful at protecting the house from a Medicaid spend-down situation, you will also inadvertently be handing your children a huge tax liability after you pass away. A tax liability, that with proper planning, could be avoided entirely.
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Contact Michael Ruger with Questions: 518-477-6686 or mruger@greenbushfinancial.com
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Опубликовано:

11 апр 2023

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Комментарии : 22

@binhvong5297 Год назад

You are amazing, so much good information! Please keep it up. Cheers.

@RYang-fz1ve 4 месяца назад

You've just gained a new subscriber!! Thank you so much for sharing your expertise and for this video! I learned so much!! I do have a couple of questions: 1) Is it tax-free to transfer a home to a child? 2) If gifted, can the child rent out the home, ever? 3) Is property tax affected when the home is transferred to the child? 4) If the child decides not to sell the home, but instead puts it into a living trust and passes it on to their kids, would their kids have to pay any capital gains tax when they sell it? Thank you!!!

@greenbushfinancialgroup 4 месяца назад

Thank you for subscribing to the channel!! The gift is a tax free event. Once the house is gifted to child, if gifted with a life estate, they could only rent it if the parents allowed. The property taxes could be impacted after the gift to the child but it depends on the state that you live in how it will be impacted. If after the parents pass, the child transfers the ownership of the house to their living trust, and then it passes to their kids as the beneficiaries of the living trust at their passing, they would receive the step up in basis. (This comment is for education. Not advice)

@RYang-fz1ve 4 месяца назад

@@greenbushfinancialgroupThank you so much for your response!! Any idea what the laws are in CA for property tax on a gifted property? Say parents bought the home in 2004, for 200k and is now 340k? Will we have to pay more in property tax than they did if they gift it to us? Thank you!

@PH-dm8ew Год назад

for the grantor irrevocable trust can i still obtain loans against the property (i.e-home equity) from a bank?

@greenbushfinancialgroup Год назад

It depends on the bank and the language in the trust document. If the only asset owned by the irrevocable trust is the primary residence, banks may be reluctant to issue a mortgage or HELOC because banks like to see income for the entities that they lend money to and the trust would have no income. (Comment is for education. Not advice)

@alexandervargas5304 2 месяца назад

Does this work in california? Step-up would mean here the explosion in property tax????

@TheK9Shepherd 7 месяцев назад

Senario: Wife's mother has revocable trust, my wife is the sole beneficiary (house is paid off, no liens etc..). We've been living with her mother since 2016 so this is also our primary residence. When the house is passed down to my wife via the trust we'll continue to live in the house. I understand the step up in basis (FMV at time of death) If we sell a year later and let's say our gain is $500k (from TOD to when we sell), how does that primary gain exclusion work? (I believe it's section 121?) When my wife and I file, do we benefit from that $500k exclusion? (yes we file MFJ) Or will we have to have lived in the house 2 years after her mother's death? For example when you inherit a stock, the feds consider any gains to be long term (even if we sell the stock same day when we receive it) I am curious if that 121 exclusion is "waived" since the house was passed down in a trust and we've been living here since 2016. Hope that makes sense. Thanks !!

@greenbushfinancialgroup 7 месяцев назад

If the house is currently owned 100% by your wife's mother's revocable trust, revocable trust assets pass through the estate of the decedent providing with the beneficiaries of the trust with a step-up in cost basis. Where or not the house was your primary residence at the time they passed is a completely separate variable but could be relevant for future tax purposes if the house is sold. To get the cap gain exclusion for the primary you have to have owned the house for 2 out of the past 5 years. A lot of additional questions here to give accurate guidance, so please feel free to contact our office for a complementary consult 518-477-6686 (This comment is for education. Not advice)

@haseebtube Год назад

Does it only work for irrevocable trust? How about revocable?

@greenbushfinancialgroup Год назад

Revocable Trusts do not protect assets from the Medicaid spend down process because it's still technically your asset. Irrevocable Grantor Trusts create a completed gift in the eyes of Medicaid but not in the eyes of the IRS which is why the asset remains in your estate to receive the step-up in cost basis. If you have a Non-grantor Irrevocable trust you lose the step-up in cost basis because you have made a completed gift in the eyes of the IRS and that asset is no longer part of your estate. This is why people establish a GRANTOR irrevocable trust to protect assets from Medicaid and preserve the step-up. (Comment is for education. Not advice)

@luckle4636 4 месяца назад

Can you use the life time gift exemption based on the current value of the house (as estimated by a professional)? As long as the current value of the property will not exceed that exemption in form 709, there should be no tax consequence. Right?

@greenbushfinancialgroup 4 месяца назад

Yes, if the value of the house is below your Fed & State lifetime exemption amount, no gift tax would be due (Comment for education. Not advice)

@tambui5775 Месяц назад

@@greenbushfinancialgroup

@yodadarnell 5 месяцев назад

Hello. What if the child receiving the gift makes the residence his or her primary residence for two or more years? Do the child qualify for the Section 121 exclusion? Thanks.

@greenbushfinancialgroup 5 месяцев назад

Yes, if the child is gifted a house, and they inherit your basis, but then they make the house their primary residence and satisfy the primary gain exclusion requirements, Then they would be able to take advantage of excluding all our proportion of gain from taxation. (Comment for education not advice.)

@tambui5775 Месяц назад

@@greenbushfinancialgroup

@tambui5775 Месяц назад

Does this apply to sibling brother or sister giving the house to each other , and does the inherit of the basis still apple to this case or only mother give the property to the child