Should I give away this property or leave it in my will?

Q. I am 79 yrs old and own a piece of property in Maine valued at about $50,000, where a grandson and his family live (and love it). I pay taxes and insurance costs, which are no problem. Should I leave the place to him in the will or transfer it now?

A. If you're certain you want your grandson to have the property and you have no plans to use it yourself, I'd be inclined to transfer it now and let him take over the taxes and insurance costs. Of course you could continue to pay those items as a gift to him if you chose. One reason to transfer a property by will is that it will get a stepped-up tax basis to the current market value at your death. However, this is not an issue if your grandson plans to live there, since after two years of ownership, he'd be able to sell the property without any tax liability. You will need to file a gift tax form, but will not owe any gift taxes until your lifetime gifts exceed $1-million. Leaving the property to him by will also would be a bit more complicated since it would involve probate proceedings in Maine as well as the state you claim as your residence. You could use a trust, but under the circumstances, I don't think it would be worth the trouble.

The only reason I can think of not to give away the property is that the gift will affect your eligibility for Medicaid should you need to qualify for coverage in the five years after the transfer.

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