For many families, a home is more than just real estate; it can be a reminder of personal milestones and shared traditions. But when it comes to estate planning, decisions about what happens to your family home can be complicated. Should you sell it and pass on the proceeds? Or transfer the property directly to your heirs? Each option has financial, emotional, and tax implications: 

Selling the Home: Simplicity and Liquidity

Selling the property as part of your estate ensures that ownership remains with you, or your surviving spouse, until death. At that point, the home can be sold, and the proceeds distributed according to your wishes.

Why families might choose this option:

• Immediate liquidity: Cash from the sale can be used to pay estate taxes, debts, or distributed fairly among heirs.
• Smoother administration: A property can be difficult to divide or maintain, especially if heirs have differing views. Selling also helps avoid family disputes.
• Tax benefits: The home’s value typically “steps up” to its market value at death, potentially minimizing capital gains taxes.

What’s lost by selling:

• Future appreciation: Once sold, the chance for the home to grow in value is gone.
• Emotional connection: If the house holds sentimental value, selling may feel like letting go of family history.
• Transaction costs: Like selling any piece of residential real estate, commissions, closing costs, and repairs can reduce net proceeds.

Transferring the Home: Preserving Legacy

Instead of selling, you can pass the home directly to heirs. This approach may preserve both the property and the memories attached to it, yet it requires careful planning.

Ways to transfer:

• Living Trust: A revocable trust avoids probate and can simplify the process, though it takes more upfront work to establish.
• Will: Naming heirs in your will is straightforward, but the property must pass through probate, which can delay transfer.
• Lifetime Gift: You can give the home during your lifetime, allowing you to see loved ones enjoy it. But gifting rules, tax consequences, and Medicaid eligibility all need to be considered.

Benefits:

• Keeps the home in the family as a legacy asset.
• May provide heirs with flexibility if they wish to keep, rent, or sell the property at a later date.

Challenges:

• Possible gift taxes or higher capital gains if sold later.
• Responsibility for upkeep, expenses, and equitable division among heirs.
• Legal complexity depending on state laws.

What This Means for Your Family

The choice between selling and transferring isn’t just financial, it’s also personal and has its fair share of short- and long-term implications. Questions to keep in mind include: Do you want to simplify your estate for heirs? Do you hope to maintain a gathering place for future generations? Or is immediate liquidity more important to safeguard family wealth and reduce stress?

No matter the option pursued, planning ahead helps ensure your wishes are honored and your legacy is preserved for your heirs to enjoy.

How VestGen Can Help You and Your Family

Decisions about real estate in your estate plan can be complex, with both emotional and tax implications. At VestGen, we work with families to weigh these trade-offs, coordinate with estate attorneys and tax advisors, and design strategies that balance liquidity, legacy, and long-term wealth.

If your family home, regardless of its size, market value or location, is part of your estate plan, or you want it to be, it’s worth a conversation. Connect with a VestGen advisor to explore the right path to help preserve your family’s legacy.