Don’t Give Anything to Your Kids

9 Sept 2023 · 1 min

Watch on YouTube

0:41

In this brief video, Jerry Taylor warns against transferring a primary residence to a child while the owner is still alive. He illustrates the tax impact with a simple example: a house bought for $150,000 that is now worth $650,000 would generate a $500,000 capital gain if the child later sells it, triggering a sizable capital‑gains tax liability. Taylor recommends instead placing the home in a revocable living trust so that, upon the owner’s death, the child receives a stepped‑up tax basis equal to the current market value, eliminating the capital‑gains tax and allowing the property to pass outside probate. He concludes with a call‑to‑action to subscribe to his newsletter.

Chapters

Do not transfer your assets to your kid's name. It may have seemed like a good idea at the time, but it's not. And this is especially true when it comes to your home. Let's say you bought your home years ago when it was $150,000. Now the house is worth $650,000. If you give that home to your child and put their name on the deed, when they try to sell it, they're going to have to pay the tax on that capital gain of $500,000. Here's the solution. Instead of giving them the home while you're alive, put it in a revocable living trust. That way, when you die, they will get your tax basis in that home and owe no capital gains tax. And the home will pass to them outside of probate court. Jump on my newsletter in my link.