Your home is full of heartwarming memories; your children’s first steps, the birthdays celebrated and countless other milestones. If you decide to keep your home in the family by passing it on to your children, communicating openly with your loved ones now helps them honour your wishes and make informed decisions about what comes next.
For many baby boomers, homes they own, whether their primary residence or a second or holiday home, are a significant part of the inheritance they plan to leave their loved ones. In fact, homeownership has contributed greatly to their ability to build wealth due to home values increasing in recent years.
However, for younger generations, things like paying off student debt and saving for a retirement without pensions often delay their own homeownership plans. While your children likely love the family home as much as you do, these financial realities may make inheriting a home feel daunting. Starting the discussion about this process now can help them understand your wishes and allow you to have a fuller picture of what best suits your family’s needs.
Exploring the path forward
It’s important for your heirs to consider how they see the home fitting into their lives, and for you to consider how you wish to eventually transfer ownership. Taking the time to communicate these ideas is a way to ensure that your wishes are properly enacted. Transferring ownership also involves logistics, like whether your heirs will own the home outright, or be responsible for an existing mortgage.
Living in the home or keeping it as a rental property would come with certain costs, like property taxes, insurance and maintenance. Or you may decide together it makes the most financial sense for your heirs to sell the home.
In some cases, the right choice may be for you to downsize or relocate while you’re still able to do so on your own terms, to reduce future financial and logistical considerations for yourself and for loved ones.
Consider available strategies
When passing on a home, there are several ways to transfer ownership. Different factors, such as whether you’re considering passing on your primary home or an additional home or property, can impact how you proceed, so you may want help pinpointing the strategy best suited to your family. Each strategy comes with different benefits and considerations, including gift or estate tax implications that may impact how you decide what’s right for your family. Whatever you decide, keep conversations going with your family to foster clarity and comfort, and help ensure your wishes are understood and supported.
Risk Warning: This article is for information purposes only and does not constitute financial advice. You should always seek advice from a qualified professional before making any investment decisions.
Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.
