House Calls: Change the Locks
Dear Edith: When you wrote about real estate closings, one of the things you did not mention was to change the locks, or have the lock cylinders changed, so that the old keys no longer work.
We trust that the old owners would not have kept any keys, but we don't know who else might have been given a hard copy over the years, like a house sitter or tenant. -- J. M.
Answer: You're right, of course. Sellers should turn over all keys to the buyers. Then, prudent new homeowners should call a locksmith promptly to make the changes.
Ms. Lank: We've owned a cottage for 28 years, and we are getting up there in age to where chores are too much. We plan to sell next year. Our son, who lives seven hours away, has expressed an interest in having it after we pass away. Despite the reality of the distance and the upkeep, and the fact that he is 15 years from retirement, he professes to love it as much as we do, and we would love for him to have it. However, our son can't afford to buy it now, and we can't be caretakers for the next 15 years!
We also have a daughter, and our wills, which were redone professionally three years ago, split everything 50-50 between them. We want to keep it even to prevent any arguments.
Should we have our home appraised? We've had three Realtors come out, and we have a ballpark figure of what we can hope to get.
What are the tax ramifications -- for either him or us -- of signing it over to him next summer? We realize he'd get that much less from our assets. The problem there, which looms over us all, is the possibility of one or both of us entering a nursing home and the assets being wiped out. I assume he'd have to settle up with our daughter in this case. -- C. J.
Answer: Your ballpark figures would probably be enough to use, just for keeping things even in the family.
If you give the cottage to your son next year, he will also receive your cost basis. If, on the other hand, he waits to inherit it, he'd have a new cost basis based on the home's value at the time of your death(s). But all that might affect the capital gains tax if he were to ever sell the home.