When doing long term care planning, many people ask about transferring their home to a child for $1. Such a transfer is a gift, a very large gift. The parents plan to continue living in the home. Is the gift a good idea? There are a number of factors to take into account. First, consider the number of children. If there is only 1 child, such a gift might be appropriate. If there are several children and the house is only being gifted to one child, such a gift might lead to bad feelings between the siblings.
If the home is gifted to a married child, who gets divorced after the home is gifted, the home could be subject to equitable distribution. The house might have to be sold, so the parents could no longer live there. Does the child have good credit? If not, the child’s creditors could force a sale of the home to pay the child’s bills. Or, the child could decide to sell the home and evict the parents. What if the child passes away first? The house might be left to the child’s spouse or issue, which again might lead to the parents no longer being able to reside there. Also, a gift of the home to a child may create a period of ineligibility for Medicaid if one of the parents needs to be in a nursing home. Long term care planning needs to be done with an elder law attorney before a home is transferred for $1 to ensure that the parents’ interests are protected.