A lot of clients will come to us and they want to protect the property, and they’ll ask us to simply transfer or gift the property outright to their children. We’re hesitant to do that for a few reasons. We have to look out for the best interest of the client, and if we make a transfer of that nature, it could expose them to liability. Also, it will cause terrible tax issues known as capital gains because the children will have a tax on the profit when they ever sell it down the road. One way to cure this is there’s a certain deed in Ohio known as a life estate deed.
It does make a transfer of the property to the children, which does avoid probate. It does get some protection for long-term care benefits, but it also reserves the interest of the parents. The parents have the right to live there and enjoy it, so there’s no liability issue during her lifetime. And it does preach patience, so the parents will receive it or the children will receive the complete interest upon the passing of the parents, and that’s of significant benefit for tax issues or capital gains. It’s not a perfect deed. Everything has its upside and downside. So seek counsel before ever executing one and know the pros and cons.