Families across Long Island confront a challenging housing market as they strive to keep ancestral homes within the family.
Strategies such as revocable or irrevocable trusts, gifting, last wills, and direct sales help maintain these assets. Each, however, has its own set of pros and cons.
While revocable trusts offer more latitude in changes, they fall into probate and do not protect assets from Medicaid. Conversely, irrevocable trusts shield assets but lack flexibility.
Gifting property is another option. It can reduce estate taxes, but care must be taken to avoid gift taxes.
Handling Long Island’s Inheritance Housing Issues
Some organizations turn to last wills, which provide specifications for an inheritance, but the property may still face probate, thus adding complications.
Rhonda Glenn, a Central Islip resident, received her parental home as a gift, avoiding the lengthy and expensive probate process but effectively preserving the family property. However, home transfers often involve emotional turmoil and financial challenges, not to mention complex legal requirements.
Older properties are particularly challenging, with potential issues such as property liens, unexpected delays, disputes over property lines, and possible structural or system problems due to aging.
Transfers also require settling any remaining mortgage, an impossibility for many in a time of high-interest rates.
For those like Glenn, the home transfer also carries an emotional weight. Taking on the family home can be exciting but saddening due to the absence of the original owners.
Legal processes and an emotional attachment must be navigated during the homeownership transition, mainly when the home is deeply rooted in family history.
Some people, including Attorney Joel Katims, argue that using wills for home transfer can reduce capital gains taxes for heirs. A ‘stepped-up basis’ practice raises the property value to its value at the time of the previous owner’s death, potentially saving considerable taxes if the property’s value has increased substantially.
However, using wills may not be ideal for everyone due to the potential probate complications that can prolong the process and create additional costs. Thus, it is crucial to seek professional guidance when considering these complex matters.
