“Why don’t I just sign the house over to you now?” It sounds like an easy estate-planning shortcut when an aging parent wants an adult child to inherit the family home anyway, but transferring the property during the parent’s lifetime can produce two very different financial surprises. The child may lose the favorable tax-basis treatment that commonly comes with inheriting appreciated property at death, while the parent could create a Medicaid transfer issue if long-term care becomes necessary within the next five years. Those consequences can involve tens or even hundreds of thousands of dollars when a house purchased decades ago has appreciated substantially. Before signing a house over to a child, families need to understand why when ownership changes can matter almost as much as who eventually receives the home.
