If your parents own a home, you may want to encourage them to start thinking about what they will do with the house when they pass on. There are several options to consider, but they should make sure to include their wishes for the disposition of the property in their Last Will and Testament to prevent confusion or conflict among family members.
The House Can Be Sold
Selling the house when both parents pass away means that the proceeds from the sale will go into the estate account. After the final accounting of the deceased is complete, usually within a year’s time, the residual funds from the house sale along with other financial assets that remain after paying the outstanding bills and account balances will be distributed to the beneficiaries of the Will.
It Can Become Part of the Estate
The home could be added to the estate of the deceased for appraisal and eventual sale or distribution. That means that at some point during the administration of the parent’s estate, the home would be disposed of according to the terms of the Will. This process is typically done with estate lawyers or the lawyer that your parent’s worked with when drafting the will. The sale may take time to settle other aspects of the estate first or to enable the home to be put in good order or to increase its potential equity. If the house is sold to someone who is not a family member or beneficiary of the estate, the sale proceeds will be deposited to the estate account for final disbursement with the other remaining assets.
It Can Be Bequeathed
Your parents may choose to give their home to one of their adult children at no cost or to transfer the property to one of the children for a nominal sum of money. This sometimes happens when there is just one surviving child in the family or if the other children will receive other assets from the estate. The house might also be given to one of the adult children who provided long-term care for the parents or if one or more other children have been left out of the Will.
It Can Be Donated
Occasionally, someone will donate their home to a charitable organization instead of selling or bequeathing it. The estate receives a tax deduction that may apply toward the final estate tax to be paid. However, certain state and federal laws may have a bearing on this type of distribution. Contact a law firm that specializes in estate planning for more information.
Help your parents make important decisions about their home so everyone will be prepared when the time comes.