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Home Comforts: Maximizing Your Most Valuable Asset

December 13, 2022 by Ronald "Chip" Morrison

If you’re like many Americans, your home is your single most valuable asset, both emotionally and financially. It’s where you raise your family and where you find shelter from the harsh realities of the outside world. Your home matures with your family, reflecting the stages from a young couple’s house full of hopes and plans for the future; to a busy family’s home, full of noise and activity; to a home filled with blessed peace and quiet.

In addition to being the center of your family life and possibly your most significant financial investment, your home can offer you benefits in terms of taxes, estate planning and asset protection. For example:

  • Your home is not considered a “countable” asset for purposes of determining whether you’re eligible for Medicaid. However, equity in excess of $750,000 or $500,000 may be countable, depending on the state.
  • If you’ve lived in your home for 2 out of the past 5 years and sell it, gain on your home of up to $250,000 ($500,000 if you’re married and file a joint tax return) is tax-free. So, for example, if you’re single and made $200,000 on the sale of the house you’d lived in for the prior 3 years, you wouldn’t owe any capital gains tax.
  • Your home may be protected from creditors in various ways depending on your state of residence. In Texas, Florida, and some other states, your home is completely protected from creditors in bankruptcy proceedings. In other states, a portion of the equity in your home can be protected from creditors. Some states recognize “tenancy by the entirety.” If spouses own property in this way, the creditors of one spouse are prohibited from forcing the sale of the property in order to pay off the debt.
  • You can use your home to engage in advanced estate planning with a Qualified Personal Residence Trust, also known as a “QPRT.” The QPRT has a term of years and during the term, you can continue to live in the home. If you choose to remain in the home after the end of the term, you would need to pay fair market rent. After the end of the term, the Trust would benefit your children or other beneficiaries. If you outlive the term of the Trust, the growth in the value of the home passes to your children or other beneficiaries tax-free. The only gift is the actuarial value of the remainder interest eventually going to your children, typically a fraction of the current economic value of the home.

Your home is likely your family’s most valuable asset, both emotionally and financially. With the advice of a qualified estate planning attorney, you can make sure you make the most of your home, both now and in the future.

Mr. Ronald “Chip” Morrison, Jr. is a Board-Certified Specialist in Estate Planning and Administration by Louisiana Board of Legal Specialization and a member of the American Academy of Estate Planning Attorneys. He has been engaged in the practice of law for more than 17 years and has helped thousands of clients meet their estate planning goals and pass on lasting legacies to their loved ones. For more information or to attend an upcoming seminar, please call our Metairie office at (504) 831-2348 or contact us through our website.

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Ronald
Ronald "Chip" Morrison
Ronald “Chip” Morrison, Jr. is a Board Certified Estate Planning Law Specialist as certified by the Louisiana Board of Legal Specialization. He is admitted to practice before all State courts in Louisiana. He is also admitted to practice before the United States District Court for the Eastern and Middle District of Louisiana.
Ronald
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About Ronald "Chip" Morrison

Ronald “Chip” Morrison, Jr. is a Board Certified Estate Planning Law Specialist as certified by the Louisiana Board of Legal Specialization. He is admitted to practice before all State courts in Louisiana. He is also admitted to practice before the United States District Court for the Eastern and Middle District of Louisiana.

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