Your California family home not only represents a good portion of your wealth but also provides you with a place to live as you grow older. You may want to pass this asset on to your children or other heirs or use the property to finance your long-term care in your final years. To achieve your goals, you must document your wishes in advance. Otherwise, circumstances might arise, like a medical crisis, that leaves your estate vulnerable to creditors or subject to legal battles among potential heirs.
Think about long-term care expenses
As you age, you or your spouse may need to enter a nursing home if a serious medical problem emerges. Some people decide that they want to pass their home onto their heirs instead of selling it to fund nursing care. After contemplating the pros and cons of your options, you may prepare estate planning documents to codify your decision.
Ownership transfer
You have some options for accomplishing this goal. You might choose to transfer ownership to your heirs while retaining the right to occupy the home for the rest of your life. If done five or more years prior to needing long-term care, your home would no longer count as an asset that could prevent qualifying for Medicaid benefits. The main concern with this strategy comes from the possibility that your heirs might have the asset seized by creditors if they have significant unpaid debts or are found liable for damages in civil court.
Put the house in a trust
Instead of directly transferring property to an heir, you may use a trust to hold the home. A trust creates a separate legal entity. Neither you nor your heirs directly own the house because the trust technically possesses the asset.
When you pass away, a probate court will not need to process the ownership transfer to your heirs. The trustee will follow the terms of the trust and privately distribute to beneficiaries according to your wishes.