19 Sep Should I put my condo in an irrevocable trust?

Q. I have an irrevocable trust with my daughter as the trustee. I also have a son. They’re adults, married and with children. I presently live in and own a condo. Our question is whether the condo should be placed in the trust? I’m 78 and hope to age in place. However, there’s always the possibility I could end up in a nursing home. What’s the best approach?
— Planning

A. Growing older brings many questions, and estate planning is among the top issues to consider.

What to do with your property long-term is often at the top of the list.

But the right answer for your question will differ significantly from person to person, said Naomi Becker Collier, co-chair of the Trusts & Estates and Elder Law & Special Needs Planning practices at Pashman Stein in Hackensack.

She said whether to transfer your home for long term care planning purposes depends on your goals and specific circumstances, coupled with your willingness to give up control of the asset.

Generally speaking, when you transfer an asset into an irrevocable trust, you no longer control that asset, she said. Instead, it is controlled by the individual(s) you have put in charge of the trust — the trustee,

“While you may be able to retain certain rights, you no longer own the asset, so you can no longer act unilaterally as it relates to that asset,” she said. For example, if you wish to sell the property, you cannot act alone.

It is also important to consider income tax ramifications when transferring real property into an irrevocable trust, Becker Collier said.

“By way of example and not limitation, when you transfer real property during your lifetime outright — such as to an irrevocable trust with no retained interest — the irrevocable trust’s basis is your basis for income tax purposes,” she said. “If there is significant gain in the home, when it is sold the trust — or the beneficiaries — could pay significant capital gains tax.”

There are many people who do such transfers for long term care planning purposes, she said, but this is not such a simple question.

You should consult with an experienced elder law attorney who help balance your goals with smart, thoughtful planning.

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This story was originally published on Sept. 19, 2023.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.