Many people as they age decide to put the title to their homes into their children’s names. Usually there is a life estate retained by the parents.
I’ve written before about some of the pitfalls that may not be considered at the time decisions like this are being made. (See blog entitled ”Life Estates” July 27, 2011.) Now, I have another issue to add to the list of considerations before changing title on an aging parents’ home.
Twice now I have encountered another problem that can occur. What happens if one of those children who are now in title to the parent’s home runs into financial difficulties and have to file bankruptcy? The parent’s home is now an asset of the child that has run into financial difficulties.
One of the families I worked with where this happened, actually had to pay off a debt that was in the bankruptcy before clear title could be passed onto the new owner!
So, before making decisions about putting the title of the parent’s home into the children’s’ names, talk to attorneys and tax advisors to make sure everyone is going to be protected!