12 Reasons Not To Leave Your House to Your Children When You Die

Planning for retirement, especially if you want to retire early , could also include nailing down your estate plans.

You may be considering what to do with your home after you’re gone and might think it’s a good idea to leave it to your kids.

But before you set that in your will or trust, here are a few reasons why you may not want to bequeath your home to your children.

1. There may be tax implications

One of the biggest issues from leaving your home to your children is the tax implications they could face when you’re gone.

Capital gains taxes could be a big issue for your kids to deal with, especially if the home cost has increased significantly since you originally purchased the property.

Talk to a tax attorney or an attorney familiar with trusts and estates to make sure you consider the tax issues involved with your kids inheriting the property.

2. There’s potential for sibling squabbles

It’s also important for you to understand your kids’ relationships with each other before you hand over your home in your will.

Your kids may disagree when it comes to issues related to your home. One of the children may want to keep the house while the others want to sell it. Will that child be able to buy out their siblings?

If you decide to leave your home to your children, clearly spell out what should happen to your home after your death so there’s no squabbling.

3. It locks up equity

Your home is likely to be your most valuable asset, but that also means there’s quite a bit of cash locked up in it.

Consider the equity in your home when you’re thinking about your estate plan as well as when preparing for retirement .

Don’t be afraid to consider your home part of your retirement planning. You may want to sell it before you die to unlock the cash for health care or assisted living.

Enjoying our content? Click the Follow button above to see more from us.

4. You haven’t paid off your mortgage

Consider how your kids will pay the monthly mortgage if you expect them to move into the home after you die. If they need help paying the mortgage, you must account for that in your will.

If you want your children to live in your home, make sure your children can afford the mortgage payments. Or you can set aside cash in your will to make the payments.

5. Your kids don’t want it

You may want to leave your home to your kids, but what if they don’t want you to leave it to them?

Consider different options, like selling the home before you pass away. You could also make specific arrangements so your kids don’t have to deal with the additional burden of what to do with your house when you’re gone.

6. It’s cheaper to sell it to them now

Housing prices are high, and many young people are struggling to enter the housing market. Consider helping your kids out now instead of waiting until you’ve passed away.

Check out your options to sell your home to your kids now. You could sell it to them, remain living there, and pay them rent.

If your lender agrees, your children could assume your mortgage, or you could refinance your loan and add your children to the title.

You’ll need to consult a tax attorney to see the implications for any type of sale.

7. Your kids have financial problems

Millions of Americans struggle with financial issues, and your kids could be in that group.

You may intend to leave your home to them so they have a place to live, but their creditors may be able to go after the house or inheritance.

Make sure you have a good understanding of your kids’ debts and other financial issues. You don’t want the money or home you plan to leave to become an issue with debt collectors.

8. You’re behind on property taxes

Your home can be a good place for you to live, but you may also have financial issues when it comes to holding on to that home.

Some debt, such as credit card debt, may not be inherited in the U.S. However, property taxes may be passed down to the person who inherits your home.

Consider the tax burden you’re carrying and may be passing on to your kids if they inherit your home.

9. You’re playing favorites

You may think one of your kids may need your home more than your other children. Perhaps they live nearby or are struggling with housing while your other kids have more stable housing situations.

It’s important to avoid playing favorites. Your decision could result in hurt feelings and bitter fights when you’re gone.

Think about compensating your other children with equal amounts of your assets in exchange for leaving a home to one child.

Or clearly spell out in your will how you want the house handled after you’re gone so that it's equal for everyone.

Grow Your $$: 11 brilliant ways to build wealth after 40

10. They can’t care for your home

Owning a home isn’t just about handing off the property to your children and being done with it.

Remember all the bills you have to pay for regularly, such as utilities, maintenance, and repair issues.

You may be trying to help your kids by giving them your home because they can’t afford it. But it’s essential also to make plans for a trust or other financial means to help them pay for the house's upkeep.

11. They’ll be too sentimental

You may want to leave your home to your kids because it was the house they grew up in or the home you inherited from your parents.

But the sentiment attached to a home could make decisions for your children harder when you’re gone.

Make sure you clearly explain what you want to do with the property. And if they don’t want the property and want to sell it, be sure you let them know that’s OK, too.

12. You’re on Medicaid

Medicaid is an excellent option if you can’t afford medical care on Medicare alone.

But there are issues with Medicaid if you pass away and your kids have to deal with your estate, including your home.

This is known as estate recovery. If you’re on Medicaid and pass away, the state may try to recover money it paid to you for your care.

Instead, make sure you are aware of any problems your kids could face when you pass away while on Medicaid. You should consult an attorney to make a plan that can protect your kids and your assets from estate recovery.

Are you a homeowner? Discover 8 savvy money moves to stretch your budget

Bottom line

Make sure you understand all of the financial and emotional effects of leaving your home to your children.

Consider your financial situation and your kids’ to ensure you’re making the right decision for everyone.

You may be financially fit , but your children may not have the same financial means to handle your home if they inherit it.

And remember to talk to your kids about inheriting your home before you die so they can be prepared to take on the property or sell it.

Money tips that can work for everyone

No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.

Focus on paying off your debt . Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.

Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.

Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).