Selling vs. Transferring Property in Your Estate Plan
When it comes to deciding what to do with a home, business or another property you own in Missouri, you have options. A comprehensive estate plan can allow you to sell or transfer real estate to others based on your plans for the future. Whether it is best to sell vs. transfer property depends on your needs and goals. Make sure to speak with an experienced St. Louis estate planning lawyer for legal guidance.
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Pros and Cons of Selling vs. Transferring Property
The decision to either sell or transfer real estate is personal. When you sell your home, you completely relinquish control over the property, home or business from the date of sale onward. The new owner gains total control after the sale. If you wish to transfer ownership of the property with no strings attached, this option is for you.
If you would rather keep some control or ownership, however, transferring the property is the better choice. With a transfer, the beneficiary or new owner that you choose gains immediate control and usage. However, you can include clauses in your estate plan that allow you to maintain some decision-making capabilities or partial ownership while you are alive.
Transferring property is best suited for individuals who wish to bequeath a home or real estate to heirs. Organizing a transfer in an estate plan allows the beneficiary to avoid the probate process and inherit the property directly, without court interference, after the owner passes away. This can come with significant savings for the new owner in terms of money, time and tax liabilities.
Tax Consequences
The way that you choose to handle property in an estate plan can have different tax consequences for you or your heirs. If you choose to sell and the property has appreciated significantly in value, this can result in large tax liabilities. Selling at fair market value does have one advantage, though: it establishes a new, higher cost basis for the buyer, which can reduce their own capital gains tax if they sell the property again in the future.
Transferring the property at death, on the other hand, allows your heirs to receive what is known as a “step-up in basis.” This adjusts the property’s tax value to its current fair market value at the time of your death, which can significantly reduce or even eliminate capital gains taxes for your heirs if they later decide to sell.
Should you gift your home or property to an heir during your lifetime instead, this can have adverse tax implications on multiple fronts. First, the value of this gift will count toward your lifetime gift tax exemption. In 2026, this value is set to revert from $13.99 million back to the pre-2018 value of $5 million. Second, and often more significantly, gifting the property during your lifetime denies your heirs the step-up in basis described above. Instead, they inherit your original, typically much lower, purchase price as their cost basis, which can result in a substantial capital gains tax bill when they eventually sell. Additionally, if you sell your home to a family member for less than its fair market value, the difference between the sale price and the market value can itself be treated as a taxable gift.
Lifetime gifts can also raise concerns beyond taxes. Giving away property while you are alive means giving up control of that asset, and if you may need Medicaid to help cover long-term care in the future, the gift could trigger a penalty period during Medicaid’s look-back window, delaying your eligibility for benefits. Keep all of these factors in mind when deciding whether to sell or transfer.
¨With a background in business and real estate, I have a strong passion for guiding others through these complex areas of law. I became an attorney to have a positive impact on others. I strive to do everything I can to help my clients find a solution for their unique legal challenges.¨
Ted Disabato
Selling vs. Transferring a Business
If you are deciding whether to sell or transfer a business in your estate plan, know that selling is generally a more complex task. Selling a business involves the transfer of ownership, possible liquidations and payment of property transfer taxes. A transfer is faster and simpler, but you will retain some connection and responsibility for the business. This could be a pro or con, depending on your goals.
Important information about What is Lis Pendes in Missouri?
Which Strategy Is Right for You?
Selling the property can provide cash for you, but it removes the property from your ownership. Transferring it does not result in an immediate payment, but allows you to pass ownership of the property to your chosen heir or beneficiary. Discuss the pros, cons and tax implications of both choices with an attorney at TdD Attorneys at Law before making your decision.
Choosing whether to sell or transfer property that you own when creating your estate plan will take careful thought and consideration. Working with an experienced estate planning attorney can help, as you can receive personalized advice and information about both options. Your lawyer will identify the right strategy for you based on your unique situation. Contact us today.
Ted Disabato
Ted D. Disabato is the Managing Member of TdD Attorneys at Law LLC, Broker/Realtor of TdD Premier Real Estate and The Realty Shop, and partner in VUE Title LLC and VUE Mortgage LLC – providing his clients cradle to grave service. If you’re looking for an experienced St. Louis estate planning lawyer, make sure to contact Ted Disabato today.