It’s not uncommon for people to transfer real estate to someone they know — but there are various ways to go about doing so. If you plan to transfer real estate to a family member as part of your estate planning strategy, you’ll want to know how to do it correctly.
According to one study, 68% of young people expect their parents to leave behind an inheritance. That’s almost seven in 10. But a mere 40% of their parents intend to leave anything for their children when they pass away. If you plan to be among the four in 10 adults who leave something behind for offspring, you might want to consider the best option for your situation.
Continue reading to see four options to consider when transferring real estate to a loved one.
- Transfer Via Gift
You can transfer property to a loved one as a gift. In order to qualify as a gift, you have to provide partial or total ownership of a piece of real estate to a family member at no cost. While this can be an easy and effective way to transfer property to a loved one, the gift can subject the recipient to taxes. So, you’ll want to consult a lawyer to find the best way to proceed. The last thing you want is for a gift to turn into a financial albatross for the recipient.
- Transfer Via Joint Mortgage
Another way to transfer property to a family member is by the joint tenancy method. It’s another variation of transferring a property via a gift. If you have a property and wish to transfer it to a loved one by way of adding them to your existing home ownership, you’ll need a new deed called a joint tenancy or joint mortgage. What this means is that the person you add via joint tenancy will become the legal owner of your property when you pass away.
- Transfer Via Death Deed
Yet another option to transfer real estate to a family member is a death deed or a beneficiary deed. It’s a deed you can use to transfer a property to a loved one after you die without the need for a probate process.
The death deed will stipulate the property and the person or persons you’ll leave the property to after you die. One reason to go this route is that you can retain full ownership and control over your real estate while you’re alive. A death deed will allow you to steer clear of gift tax issues since the transfer won’t occur right away and you can revoke the death deed if you so choose.
- Transfer Via Quitclaim Deed
A quitclaim deed is another way to transfer real estate to loved ones since no covenants are involved.
“A quitclaim deed is one worth considering if you want to transfer your home in a relatively easy manner without a guarantee or warranty,” says Gideon Alper, a lawyer at Florida-based Alper Law. “You can add loved ones to or remove them from the property title. There’s also the option of transferring the real estate to a living trust or limited liability company.”
You’ll want to see a lawyer to obtain the correct deed form for transferring real estate if you want to transfer a home courtesy of a quitclaim deed,
If you’re looking for a way to transfer a home to a loved one, these four options are worth looking into. It’s always best to speak to a professional who can answer any questions you have.
As you can imagine, transferring assets that you’ve worked hard for is a serious undertaking. So it makes sense to find someone who can help you make the best decision possible.
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