You may have come to a point in life where you’re thinking about the future, more specifically, thinking about the time that may come when your adult children live on without you. It’s understandable that you want to provide for their needs as much as possible while you’re still living, as well as do what you can to give them an inheritance when you are no longer with them in their daily lives.
For instance, you may want to give an adult child your home in New Jersey. Estate planning is a valuable tool that can help you arrange such a gift. However, people often make several mistakes that you’ll want to avoid.
Avoiding probate may lead to a tremendous tax burden
You might be considering trying to help your son or daughter avoid the probate process after you die by “gifting” your house to him or her while you’re still alive. You can do this by adding an adult child’s name to a deed. Avoiding probate may seem like a good idea, but transferring ownership of a home this way could create a substantial tax bill that your son or daughter would then have to pay.
While your initial idea might have included a desire to keep your house in the family, that could backfire if your son or daughter winds up filing for bankruptcy down the line.
A living trust may be a viable option
There are several ways that you can arrange for your child to receive your home as an inheritance without putting his or her name on the deed while you’re still living. You might consider placing the house in a living trust, otherwise referred to as a revocable trust. Because such a trust is revocable, you can make changes to it as long as you are of sound mind to do so.
Assets placed in a living trust aren’t subject to probate. If you desire privacy regarding your estate, a living trust might be best because the probate process is a matter of public record while details of a trust are not. While initiating a living trust involves paperwork and a fee, many New Jersey estate owners consider it worthwhile in order to help adult children avoid probate and high estate taxes. A benefit of estate planning is that you can customize your plan to fit your needs and ultimate inheritance goals.