Purchasing a House for Your Child Without Losing Control of the Investment
Housing unaffordability has made it extremely difficult for younger people (specifically zoomers and millennials) to purchase real estate. If you’re an older family member watching from the sidelines, it can be incredibly difficult to witness your child or grandchild struggle to save enough for a down payment. If you want to lend a helping hand, you might be tempted to purchase a home on their behalf. From an investment perspective, what’s the best way to do this? Can an estate planning attorney in St. Petersburg help?
Why Choose a Homestead Trust When Purchasing Real Estate for a Younger Relative?
As the Florida Bar notes, a homestead trust allows you to “have your cake and eat it.” In the context of purchasing a home for someone else, this allows you both to have your cake. First, you should generally ensure that your younger relative enjoys all of the benefits associated with Florida’s homestead exemption. These include tax benefits, creditor protections, and more.
With a homestead trust, your relative can enjoy all of these benefits, even if they did not purchase the home. Technically speaking, they will not be the “owner” of this home with this arrangement, either. Instead, the trust will “own” the trust, but the beneficiary will have “equitable title.” The only requirement is that the trust contain specific language that clarifies the beneficiary’s right to use and possess the property for the rest of their life.
An example of this structure is a Florida irrevocable grantor homestead trust (FIGHT). However, there are many other ways to structure homestead trusts, and revocable options may be possible. To learn more about the various options, including qualified personal residence trusts (QPRTs), consider speaking with an estate planning attorney.
Can I Still Sell My Property?
Many families are attracted to homestead trusts because they ensure continued control over real estate. With certain types of trust structures (particularly revocable trusts), it may be possible to sell the property in the future. While the sale can still occur if the real estate is in an irrevocable trust, the trustee generally makes the final decision (and not the grantor).
Why Not Just Buy a House for My Relative Normally?
Many families are concerned about allowing financially irresponsible individuals to become the sole legal owners of homestead properties. Without the protection of a trust, it is theoretically possible for your young relative to leverage or mortgage the property without the family finding out.
Can a St. Petersburg Estate Planning Attorney Help?
If you’re interested in purchasing property for your young relative but you’re uncertain about risking so much of your hard-earned wealth, a homestead trust in St. Petersburg could be a valid solution. That being said, it always makes sense to discuss your unique family goals and priorities with a legal professional instead of relying on online research alone. Contact Drude Tomori Law today to learn about the next potential steps.
Sources:
nytimes.com/2025/05/08/realestate/millennials-gen-z-buying-homes.html
floridabar.org/the-florida-bar-journal/florida-irrevocable-grantor-homestead-trust-having-your-cake-and-eating-it-too-first-course/