Estate planning is the most reliable way for a person to preserve a family home and have it transferred to the heirs upon his or her death. It can also help him or her reduce tax obligations.

Estate planning can offer a framework in case a person becomes incapacitated. An estate trustee, for instance, can take the responsibility of managing the estate in case the original owner is unable to do so.

Options for Preserving a Family Home                         

Co-Ownership

Updating the current deed to include the heirs as co-owners is one of the most straightforward options for ensuring kids can keep a family house. If a child is listed as a joint tenant in the deed, he or she will become a co-owner once the deed is changed. He or she will then automatically assume possession of the home after the demise of the original owner.

Adding an heir as a co-owner, however, comes with some practical drawbacks and as well as gift tax considerations. First, when a child or other person is listed as a joint tenant, any debts that the child has, or may incur in the future, can become a lien against the home.  Further, if only one child is added for convenience, they may not share with their siblings even though this may be the desire of the owner.  Second, when a home is offered as a gift through co-ownership, the percentage transferred is deemed a taxable gift and becomes part of the lifetime exemption. The recipient must, therefore, report it for gift tax purposes.

A Will

A will is another effective option for preserving a home and avoiding a family feud. Through this document, the owner can choose who will inherit the house. Home transfer through a will, however, goes through a probate process that can be timewasting and costly.

A Revocable Trust

This legal arrangement enables the trustee to remain in control of the family home during his or her lifetime. It also enables him or her to spell out how and when the house should transfer to the beneficiaries. Upon the death of the trustee, the trust serves as a will substitute and facilitates a quick transfer of the property.

Transfer on Death Instrument

This document enables the owner to retain sole ownership during their lifetime.  Upon the owner’s death, the house is transferred directly to the named beneficiaries without the necessity of going thru the probate process.  

Illinois land trust

An Illinois land trust separates the legal ownership of real estate from beneficial ownership.  The land trustee, usually a bank or trust company, becomes the legal owner, while the individual holds the beneficial ownership and power to manage the property, including obtaining a loan.  The trust document allows the owner to name successor beneficiaries in much the same way as a Revocable Trust.  Land trusts can only be used for real estate and not other property.

A Qualified Personal Residence Trust (QPRT)

This option allows the transfer of a primary or vacation residence to a beneficiary at a lower gift tax value. It also allows the original owner to continue living in the residence throughout the entire QPRT period. An estate planning attorney can help the original owner decide how long he or she wishes to reside in the home before it transfers to the beneficiaries.