Recently I have worked with a number of families who put their parent’s home in the children’s names with the parent retaining a live estate.  This was done to protect the asset should the parent have to live in a care facility.  Most of these families did this a number of years ago, and have forgotten that they even did this.

I just want to talk about some of the pitfalls to this strategy.  The first one that comes to mind is that now when the home is sold, the children will be paying capital gains tax on the amount of money that they realize from the sale of the parent’s home.

Another pitfall is that if there has been a falling out with one of the children, it may be interesting for the family to get that family member to sign out of the property. Or maybe one of the children refuses to sign out of the property because they don’t want the money since they have to pay tax on  it, or  maybe they don’t think that  the parent should be selling the house and moving.  There are many reasons that conflicts arise in these situations.

My advice to all families is to consult with their  attorney and accountant to make sure that the parent’s home is being held in title to the best advantage of everyone involved.