If you own a home in New Jersey, it’s no doubt one of your largest assets. You may have had the house built yourself or live in a home that has been in your family for generations. Either way, if you’re ready to execute an estate plan, you’ll want to explore available options for passing down the home to a chosen heir or beneficiary.
One of the benefits of the estate planning process is that you can customize your documents to meet your own needs and ultimate goals, including how to distribute your assets. There are several ways to pass down a house to your children, a grandchild or someone who is not related to you in any way. It is important to carefully review all planning options to make sure you are fully aware of the implications of each document.
“Gifting” a house to someone while you’re still alive
You might think it’s easiest to simply give your house to your chosen heir or beneficiary while you’re still alive. You can do this by signing an irrevocable trust. However, after considering the possible implications of passing down a house in this way, you might decide that another option would be better. For instance, you’ll want to be aware that the home could face foreclosure if the person you give it to files for bankruptcy at some point.
Selling your house for a lower-than-market-value price
If you don’t want to “gift” your house to someone while you’re still alive, you might consider selling it to them for a low price. It is typically best, when going this route, to sell the home for a price that is comparable to other recent home sales in the area. Failing to do so could have major tax implications for your buyer.
Revocable trusts can be used to pass down a house
A revocable living trust is an estate planning tool that enables you to designate who should receive your house or any other assets after you die. A benefit of this particular document is that you can make updates or changes to it, as long as you are of sound mind. As opposed to an irrevocable trust, which you cannot change, a revocable living trust gives you leeway, especially if you wind up changing your mind about who you would like to pass down your home to after your passing.
Seek clarification of New Jersey laws ahead of time
Estate planning laws vary by state. For instance, some states allow estate owners to sign a “transfer-deed-upon-death” document, which enables a chosen beneficiary to become the deed holder to a house after the previous owner has died. Not every state allows this option, however, which is why it’s best to speak with someone who has experience in drafting estate plans in New Jersey to determine what options are available and which might be the best course of action to help you accomplish your goals.
