For many families, a home is their largest asset and the place where years of memories were made. Leaving it to your children may seem straightforward, but the method you choose can affect your control during life and your children’s responsibilities later.
Ohio homeowners have several planning options, including a transfer-on-death designation affidavit, a trust or a transfer of ownership during life. At Ibold & O’Brien, we help homeowners in Chardon, Orwell and surrounding communities consider how each option fits their family and broader estate plan.
Start With Your Goals and Your Deed
Before deciding how to transfer your home, consider what you want to happen. Should your children sell it and divide the proceeds? Would one child like to live there? Does your spouse need to remain in the home? Are any beneficiaries minors or unable to manage property independently?
Your attorney should also review the current deed, mortgage and other relevant documents. Sole ownership, shared ownership and survivorship arrangements can lead to different outcomes. A plan should account for the interest you actually own and any rights held by a spouse or another owner.
Using an Ohio Transfer-on-Death Designation Affidavit
Ohio allows a property owner to designate who will receive the owner’s real estate interest at death through a transfer-on-death, or TOD, designation affidavit. Although people sometimes call this a “TOD deed,” Ohio’s current designation process uses an affidavit.
The affidavit must satisfy Ohio’s requirements and be recorded with the county recorder where the property is located before the owner dies. Signing it and keeping it with your estate planning papers is not enough. Married owners and properties with multiple owners require particular attention. Ohio Revised Code Section 5302.22
A TOD designation does not give your children a present ownership interest. You retain ownership during life and can change or revoke the designation through the required recorded document. A valid TOD transfer takes priority over conflicting instructions in a will. Ohio Revised Code Section 5302.23
For a straightforward transfer to adult children, a TOD arrangement may help the home pass outside probate. Your beneficiaries will still need to complete the required steps to document the transfer after your death. Ohio Legal Help: Transfer on Death for Homes
When a Trust May Be a Better Fit
A trust may be worth considering when you need ongoing instructions about the home. For example, you may want to provide housing for a spouse, delay a child’s receipt of property, arrange for a sale or establish a process for one child to purchase the others’ interests.
The trust can identify who will manage the property and set out the trustee’s responsibilities. It can also address expenses and distributions, giving the family a framework beyond simply naming new owners.
The ownership and transfer documents must be coordinated with the trust. Signing a trust agreement alone does not necessarily place the house under its control. We can help you consider how a trust would work alongside your other estate planning documents.
Transferring Ownership During Your Lifetime
Adding a child to your deed or giving them the house now changes ownership during your lifetime. Depending on the arrangement, this may limit your ability to sell or refinance without their involvement and introduce concerns involving their creditors or financial circumstances.
The tax treatment also deserves attention. Property received as a gift and property inherited at death can have different rules for determining tax basis, which affects a later taxable gain. Inherited property generally receives a basis tied to its value at death, subject to exceptions. Discuss the tax consequences before signing a deed. IRS: Gifts and Inheritances
A lifetime transfer should be considered in the context of your own future housing and care needs, as well as your children’s circumstances.
Plan for What Happens After Your Children Inherit
Leaving a house to several children creates practical decisions. One may want to sell, another may want to move in, and another may be unable to contribute toward expenses.
A useful planning discussion includes:
- Whether the home should be sold or kept in the family.
- How ongoing taxes, insurance, maintenance and mortgage payments will be handled.
- Whether one child should have an opportunity to buy the property.
- How the price and timing of a buyout would be determined.
- What should happen if a child dies before you.
The best transfer method depends partly on how much direction your family will need. Shared ownership may be workable for some families; others benefit from a plan that provides for a sale and distribution of proceeds.
Probate Avoidance Is Only Part of the Decision
A TOD designation does not eliminate mortgages or other liens. Beneficiaries receive the property subject to applicable encumbrances. Ohio Revised Code Section 5302.23
Ohio Medicaid estate recovery may also affect a home transferred at death. Avoiding probate does not, by itself, protect the property from recovery. Insurance coverage and eligibility for a homestead exemption should also be reviewed when ownership changes. Ohio Legal Help: Transfer on Death for Homes
Discuss any anticipated long-term care needs before choosing a transfer strategy. The right plan should consider your needs during life as well as the eventual inheritance.
Get Help Planning for Your Ohio Home
Ibold & O’Brien can review your deed, discuss your goals and help you choose an approach that works with the rest of your estate plan. Whether you want a straightforward transfer or a more detailed arrangement for your spouse and children, planning now can give your family clearer direction.
Call 440-285-3511 or contact Ibold & O’Brien to discuss leaving your house to your children.