By Anya Martin | The Wall Street Journal
One way to keep adult children closer to home: gift them a piece of the house.
Most of the time, down-payment assistance from parents comes in the form of cash. But gifts of home equity are another option to provide financial assistance while keeping a high-priced home within the family.
Gifting equity in the family home “can be a nice way for a parent to help a child afford something larger in a better neighborhood,” said Katherine Dean, head of wealth planning for Wells Fargo Private Bank, which has seen a recent rise in higher-net-worth clients gifting equity.
Typically, downsizing parents gift a percentage of their home’s equity to their child, who then uses a mortgage, cash or other resources to cover the rest of the purchase price, explained Edward J. Achtner, regional sales executive and senior vice president in Northern California and Oregon for Bank of America.
In another scenario, the parents can gift a portion of their home’s equity to a child while remaining in the house.
Statement by Laura Bianchi, head of Rose Law Group Estate Planning/Asset Protection Department: Gifting can be an effective estate planning tool for families to utilize, however, it also has its complexities so its important to consult an estate planning attorney prior to proceeding, to ensure it meets your specific goals and needs.
If you’d like to discuss real estate matters, contact Rose Law Group founder Jordan Rose, jrose@roselawgroup.com
If you’d like to discuss estate planning, contact Laura Bianchi, head of Rose Law Group Estate Planning/Asset Protection Department, lbianchi@roselawgroup.com
