How to Leave My House to My Children
- 1). Create a Last Will and Testament or an estate plan with a trust. These documents state who receives what assets in your estate. Contact a family law attorney to properly draft either one or both of these documents.
- 2). Fund the trust by transferring the house title to the trust. By doing this, the trust is the owner of the property with you as the trustee. If you don't have a trust, you do not need to fund it and can move to the next step.
- 3). Value your estate by adding up the total value of real estate, savings, automobiles, investments and retirement plans. Include the total value of life insurance proceeds that will be paid upon your death. While beneficiaries don't pay taxes on life insurance, the face value is considered as part of the aggregate value of your estate.
- 4). Calculate how much tax will be owed on your estate upon your death. This should include the Federal Estate Transfer Tax as well as state inheritance taxes. While 2010 has an unlimited exemption with the tax repealed, you will only be able to have a $1,000,000 exemption starting in 2011 with a 55 percent maximum estate tax on values over this amount.
- 5). Apply for life insurance that covers the amount of taxes that will be owed upon your death. While the value of the life insurance increases your estate, it creates a liquid cash value that can pay the taxes without having to liquidate property.
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