jeff is my grandson. kristy is his wife. i want to turn over a house thats in my name to them. do i need to put it in both their names in ca...

Question

jeff is my grandson. kristy is his wife. i want to turn over a house thats in my name to them. do i need to put it in both their names in case they should split up in the future? they have 2 sons. i live in north carolina.

Answer

This is bad. Better from a tax standpoint if you just leave it in your will to your grandson. Why include his wife? Just leave it to your grandson. Inheritances are separate property and if they split up this will not be subject to equitable distribution by the wife. If you add both names then it will be partly the wife's.

If you want to give it now to the grandson, there are repercussions for you. How old are you? How is your health? Are you going to still live in the home? Will you be needing Medicaid in the next 5 years if you had to go into a nursing home? Nursing home care is very expensive so how would you pay for it? If you are going to be living in the house then I suggest that you keep a life estate just for you. There are also tax consequences to giving property now and whether you give it outright or only a life estate. You can only gift up to $13,000 to any one person in one year. Gift taxes apply after that and are paid by the donor and also count against the lifetime exclusion.

I suggest before you do something that is going to cause a lot of headaches and complications that you sit down with an estate planning attorney to figure out the best way to benefit your grandson and his children. A more fundamental question you should ask is whether the grandson even wants your house. You might be surprised to learn that he may not. I don't know - I can tell you that estate planning clients of mine made one suggestion and after talking to their kids they came up with a totally different distribution scheme.

So this is something which you and your grandson should discuss and after doing so, if he has a need for the house now, then you need to get up with a real estate attorney. As I said, you also need to know if you will be staying in the home and its value. Perhaps he can "buy" the house from you and you can forgive $13,000 of the debt each year until it is all transferred and/or you can provide in your will that any remaining balance is forgiven upon your death. Or you can leave it to him in your will. If the latter, then you will want to see an estate planning attorney who can look at all your assets, debts, income and circumstances and come up with the best way to transfer the home. And by all means, do not add the wife's name to this.