<p>As I mentioned before, we consulted with a lawyer who specialized in trusts before. Our difficulty was that we have property in different places - different states, different countries. He said he had to deal with different state laws, and each state involve a different lawyer for that state/country and him needing to co-ordinate it for us. It got too complicated and he dropped us. </p>
<p>Then two years ago, we tried again, same result. I don’t remember the all the details now, it was a while back. I think we were told we have two choices, set up an corporation or trusts for estate planning. </p>
<p>I suppose we have to redouble our efforts in this regard.</p>
<p>tango : I plan and hope to live a long time. I have no idea what God or Fate have in mind and therefore I am trying to cover all the basis.</p>
<p>This sounds like a life estate with the remainder to the kids. That means that you would retain the right to exclusive use of the property during your lifetime and, depending on how the documents were written, could do anything except sell it or unduly encumber (take too many loans out against) it.</p>
<p>The biggest issue I foresee with doing either a life estate or adding the children to the deed is this - what if something happens and you need the money that a sale of the property would bring? None of us ever expected to live through economic times like these, and yet here we are. Suppose there’s an injury or illness, or even better, no injury or illness but you outlive your retirement income and you want to sell the house. Right now, you can’t conceive of your kids saying “No”, but in 20 or 30 years, who knows? </p>
<p>Or suppose one of your kids falls on hard times and sues to force a sale of the property against the wishes of the others?</p>
<p>These are possibilities that have torn families apart if the occur, and they occur more often than you might imagine. </p>
<p>Your attorney should definitely be involved to deal with these matters beforehand.</p>
<p>Many of the reasons not to do this have already been posted, but as a lawyer I have had to deal with the heartbreaking and unnecessary problems which arise from people doing things they don’t have to do in the anticipation that it will achieve some minor benefit, without knowing all of the things that can happen in the future. I’ve seen the scenario of "one house for son #1, other house for son #2 blow up into acrimony. I’ve seen living trusts abused to cheat heirs out of their share of an estate, and to delay the distribution of assets. I’ve seen litigation drag on for years over “What Dad and Mom would have wanted if they’d known…” </p>
<p>Don’t do it. Don’t promise to do it, or promise to leave anything in particular to either of your kids. Nothing good will come of it. Seriously. You may find that you need to sell the property in future years o deal with an unforeseen emergency. Your son may marry a “golddigger” who spends all of this income and drives him into debt. I could go on and on. Bottom line: If you want to give your son something give it - no strings attached. If you can’t do that, don’t do it. Leave your estate to your two kids in your will and let them decide to sell or keep whatever you own at that point so as to divide it evenly. But no strings They just make trouble.</p>
<p>Thank you, there is wisdom in this. I do wonder about the wisdom of my idea, I suppose that’s why I am posting it in public for the world to see.</p>
<p>Having said that, just from a philosophical point of view, isn’t all long term planning have an element of …let us say, trying to control the uncontrollable ? For eg. we put money into a financial plan when the kids were 1 year and 2 years old, hoping that would have covered their college costs. That plan, which we still have, would have covered only 1 year’s worth of college. Thank goodness we had a plan “B” in place. Some plans work out, some don’t. </p>
<p>To address one issue brought up - we are not thinking of putting our primary home into the children’s name. This house in question is a part of our assets but not a significant one. If something went wrong terribly, it will hurt us, because of sentimental reasons first and then financial. Both children has excellent relationship with each other, if one child get one house, the other will get another. We have more than one house. We can just put both their names on any house they will inherit but I think joint ownership on an asset like a house makes it more complicated, ie. each kid then has two buy the share off the other. </p>
<p>Having read all the various helpful posts, I think we should put this idea in the back burner for now as our life is in transition. We don’t even know exactly where we will live full time eventually. Eventually maybe we should simplify our assets to made estate planning easier. I think for now, perhaps we should just purchase some additional life insurance to help paid for tax expenses in case something happens to us. </p>
<p>Thank you everyone for sharing your opinions on this.</p>
<p>Regarding the tax consequences- there are estate taxes, which is paid by the parents or grandparents estate and there are income taxes. The basis in the house affects income taxes.</p>
<p>If that earlier example of a $200k vs $400k basis sold for $1,000,000 later by your son, then he would be liable for the income tax on the $600k-$800k gain, less whatever is allowed, so now $250k-$500k (single/couple) capital gains exclusion, but who knows what it will be in the future!!</p>
<p>I think you need to try another attorney. With multiple properties you definitely need estate planning. You may also want to look at incorporating as it may provide some tax benefits. We set up a trust and there were all kinds of issues I hadn’t thought of that our attorney did.<br>
You may have the right idea to put it on the back burner for a short time and try to look at your assets and whether you want to consolidate things before you do anything. Just don’t wait too long. It could be very complicated for your children if they have to untangle your estate.</p>
<p>Kluge brings up some valid points, I have worked in connection with financial planners, etc over the years and I have seen family suing family; I saw a judge and attorneys tell a client he should not sue, but he still did. These were family members who all had thought they got along very well, until one’s mental picture did not match that of the other’s! It was costly to all concerned and painful.</p>
<p>Um, I think you can safely take this as a sign. I commend you for at least keeping this issue on your back burner … because it’s unlikely the issue is going away.</p>
<p>As many prior posters have mentioned, what makes this process so difficult is that circumstances change over time. Consider how passage of the primary residence capital gains exclusion legislation changed things … or the availability of reverse mortgages. In my mother’s case town zoning changes greatly affected her property, but she was elderly at that point and uninterested in modifying her will. </p>
<p>Before the financial crisis struck and esp. Bernie Madoff Ponzi scheme came to light, we were starting to take baby steps to “simplify” our assets. We were going to liquidate properties which are cumbersome in favor of portfolio managers and such. The plan was to eventually move more and more of our nest egg into various kinds of financial instruments. The effect of Madoff’s crime was to make us think perhaps our own varied mix was not so bad after all. I would hate to be 80 years old, and lost my life savings like so many of Madoff’s investors. I bet those investors thought they were simplifying their lives, receiving an steady income/growth from Madoff.</p>