When to put home in daughters' names
Q. My daughter gave me a hard time because my house is only in my name now that my husband died. I would appreciate your explanation of why it is not wise to put the house in the children's name. I have four daughters. God bless them, but I hate arguments.
A. Sometimes it pays to put your house in the children's names. If, for example, you think you'll have need for the social welfare program Medicaid in the future, you may face a five-year look-back. When you try to get help through Medicaid, assets you'd given away during the preceding five years could still be counted as yours, and you'd have trouble qualifying. I have no idea, of course, whether Medicaid figures in your plans.
As an owner-occupant, you could sell your longtime residence any time and use the special homeowner tax break. As long as you've lived in the home for two of the previous five years before the sale, you are entitled to take up to $250,000 profit free of any capital gains tax. But if you give the kids your house instead, they also receive your cost basis. And because they don't live there, no special home seller tax exemption would apply when they sell. They'd owe capital gains tax on all the profit, figured from your cost basis. That'd be true even if you were still living there.
But if, on the other hand, the kids wait to inherit the house, they'll get a new cost basis, valued at the time of your death. If they were to sell soon after that, they'd probably have no taxable profit.
Not all the potential problems are related to income tax. Once other people have title to your home, your property could be involved in their problems. If one of the kids were to get in trouble and end up in court, for example, it's possible a lien, a financial claim, could be placed on all the real estate they own - and that would include a share of your home. The property might even be involved in a divorce settlement.
This seems like a lot of reasons not to transfer ownership, but I know nothing about your situation. A lawyer who specializes in estate planning or a certified public accountant could consider the value of your home; how much it has appreciated since you bought it or since your husband died; your whole estate, age and health; and some facts about your daughters and give you better advice than I can.
Q. My wife and I signed a lease three months ago and moved into the upstairs apartment in a two-family house. Things are going OK, but today I came home earlier than usual and found the back door unlocked and my landlady standing in my kitchen. She said she worries about tenants leaving the gas burners on and likes to check. This really bothered me. Who knows what she's looking at while we're away at work?
Is she allowed to do that? Do we have the right to change the locks? Is there anything you can suggest? I hope you won't say, "See a lawyer."
A. You can be your own lawyer. Take that lease out and read the fine print. It usually gives the tenant the right of quiet enjoyment of the premises. That means you can occupy the premises without interference from anyone, and that includes the landlord.
A lease would usually give her the right to enter in an emergency. Yours may list the reasons she could enter your apartment - to make repairs, for instance. But she is probably required to give you adequate notice. If that's not in the lease, it may well be part of your state law.
• Contact Edith Lank on www.askedith.com, or 240 Hemingway Drive, Rochester NY 14620.
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