Estate Planning: Gifting with a Residential Remainder Interest

Accounting Technology,  July, 2007  by Michael Dubes

• E-mail
• Print
• Link

Many retirees intend to live in their residence until they die or are compelled to move to an assisted living facility. While they may cherish their homes, their children may not feel the same attachment, so there is little motivation to leave residences to them. If the homes are left to heirs, the value is included in the parent's estates, and the children are apt to sell the property to pay taxes.

Retirees can overcome this issue by gifting a remainder interest in their home. There are ancillary benefits to the strategy, as well.

Let's assume a retired couple living in a residence worth $1.5 million has already made ample provisions in their will for their children. The children will sell the property and pay estate taxes on the appreciated value. Meanwhile, the couple is active in several charities and would like to make a meaningful gift to their ...