Gifting a Home to Children - Ask First, Then Decide

Clients called me the other day saying, on the advice of their financial planner, they wanted to gift their home to their children. Their financial planner told them they could "do this all without anyone knowing". Thankfully, they called me first, and I firmly advised them not to make the gift. Why was I so against it? In their specific situation:

1. They do not have adequate funds (excluding the home) to pay for nursing home care if they needed it (and they are 70+ in age);
2. Gift tax issues come up because they'd be giving a gift of more than $13,000/per/year;
3. Capital gains tax issues may be a problem for the children (if they sold the home, they'd pay cap. gains tax on any profit over the purchase price of the parents in 1964);
4. Transfer fees owed to the department of revenue were not factored in.

Gifting can be an ideal option for some clients, just not these clients. All too often I find myself telling clients that "legal advice" from financial planners and insurance sales people are not "legal" nor are they sound. Always, always, seek the advice of an attorney before gifting a home, or any other property. It is far less expensive to hire a lawyer for advice beforehand, than to hire one to clean up a mess.