Except in the case of the superrich, [real estate] is most likely the parents’ major asset, and their children understandably want its future resolved while their parents are still in good shape mentally and physically. They want to avoid unnecessary estate taxes, capital gains taxes and other financial penalties should the parents die or move to smaller, easier-to-manage quarters.
Some assets are simply more important than others. In many families real estate is that asset, particularly the family home. How and when should real estate be passed through the family?
This can be a very difficult question. Commonly, elderly parents do not want to leave the old family home. Nevertheless, there are some important financial and legal considerations to ensure the real estate “issue” is dealt with properly and at the right time.
The New York Times recently provided some solid guidance for adult children (or other loved ones) in an article titled, “Mom and Dad, Let’s Talk Real Estate.” Given that the article originated in the Big Apple, the real estate in question is in the form of apartments.
Your home may be an apartment in the Big Apple or a farm on the prairie. The value of your home may have gone up and up, or the value may have burst with the 2008 housing bubble. Regardless, the wise counsel offered in the article is transferrable wherever “home” is.
Why? Because real estate decisions are as emotional as they are financial. Parents do not want to move from the old family home and the memories that live there. On the other hand, their children just want what is best for them and the family home itself. Sometimes, this means selling the family home or transferring it from one generation to the next.
There is no one solution. However, there are more options available if you plan now, rather than react later.
Reference: The New York Times (June 28, 2013) “Mom and Dad, Let’s Talk Real Estate”