Dear Liz:I would like advice on how to transfer my condo to my son and grandchildren. It feels like I don’t have much life left and I need to get a clear understanding of what would be best for me and them. All articles are very confusing. Can you advise me on what is better, a transfer on death or another form of transfer avoiding probate?
Answer:Transferring your condo during your lifetime is probably not a good idea, as the property would not benefit from the beneficial increase in tax basis upon your death. Without this increase, your heirs may have to pay capital gains taxes on the appreciation that occurs during your lifetime.
You could leave the property to your heirs in your will, but this would involve your estate going through the legal process called probate. In many states, probate is not a big deal. In other states, including California, probate can be lengthy, expensive, and should be avoided.
A living trust is often the best way to transfer an estate to heirs without probate, although the cost can be $2,000 or more.
If the joint tenancy is your only asset, a transfer on death deed may be a simpler and less expensive way to pass the property to your heirs. Many states now offer this option, and you can often find the form by searching for transfer on death certificate and the name of your state. Your county clerk’s office may also offer downloadable forms. You will usually need to have the form notarized and then file it with the county property records office for the deed to be effective.
Find an affordable, fee-based financial advisor
Dear Liz:You still advocate hiring a fee-based financial advisor. But where do you actually find one? I found that those who say they are fee-only are actually asset management advisors when you dig deep, and the cheapest fee-only advisor I found costs $6,000. I just want them to review my financial plan and help me develop a retirement investment portfolio.
Answer:The assets under management model, in which the advisor charges around 1% of your portfolio in exchange for financial advice, is probably the most common fee-only arrangement. But there are others. The Garrett Planning Network, for example, represents planners who charge by the hour. The XY Planning Network and the Alliance for Comprehensive Planners offer referrals to planners who charge fees.
Liz Weston, a certified financial planner, is a personal finance columnist for Nerd Wallet. Questions can be sent to him at 3940 Laurel Canyon, #238, Studio City, CA 91604, or by using the contact form at www.asklizweston.com.
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