Can I sell my home to my daughter for $1?

Q: I want to sell my home to my daughter for a dollar. Is this something I can do myself, or do I need to see a lawyer? — Carolyn L.

Q: We retired in Florida. Our condo is owned by our New York “Living Trust.” Is this OK? Also, I want to make some changes to my trust and will; can I just make and initial the changes? — Carolyn G.

A: Properly planning both your homeownership and estate plans is significantly less expensive than having to fix problems later. This is truly an area where an ounce of prevention is worth a pound of cure.

While individuals can legally draft a will, trust, or deed for themselves, it is not wise to do so unless they are knowledgeable and qualified to do so. I often tell clients that while I could technically stitch a cut on my own leg, I would be much better served going to the emergency room. I could probably stop the bleeding, but the scarring and infection could be a lot harder to fix. The same can be said about preparing these important documents yourself. While I am sure that you can find an appropriate-looking form on the internet, there is a good chance it could have unexpected ramifications. I spend a fair amount of my practice fixing issues caused by self-help documents.

Additionally, any transfer of a home is technically a sale, and there may be tax-related consequences to transferring a property to your child. For example, your transfer might impart a hefty “gift tax” from the Internal Revenue Service on her, or you may owe transfer tax, known as “documentary stamps,” to the state. There is much more to properly transferring a title to your property than signing on the dotted line.

Finally, no, do not make changes on your trust or will and initial them. This is not an effective method of making changes to these important documents. Out-of-states trusts can own property, but it is important to at least have them checked when you move to another state, since the laws of the state that you live in can have a great effect on your trust.

Gary Singer