Building Long-Term Wealth with Your Home


Real estate is one of the largest assets people own. Real estate tends to appreciate over time, so with care, home equity can be the foundation for your family’s fortunes, resulting in profits that can affect your children’s and grandchildren’s wealth. Owning real estate can put you on a path to growing generational assets.

Home equity is the portion of your house and property that you own; it is not the full value of your house, but rather the house’s current market value minus any outstanding mortgage debt. When you borrow to buy a home, your initial equity stake is your down payment. Over time, your home equity increases as you make mortgage payments and as your home’s market value hopefully climbs.

You might look at your monthly mortgage payment as a forced savings account: You are investing for the future. When you make home improvements — remodeling the kitchen or adding energy-efficient features that provide tax deductions — you improve the property’s appeal and thus, its marketability.

Your equity is your real financial potential: It is an asset that can be borrowed against or sold for profit. You can tap into that equity through a home equity loan or line of credit, or with a cash-out refinance, perhaps getting better interest rates than on a personal loan. When you sell your home, often your primary source of wealth, its equity, is your chance for profit.

If you include the house in your estate, bequeathing it to your children, you can pass along this wealth to your descendants. Your descendants might choose one of several options:

  • They might sell the house.
  • They might make it their primary residence.
  • They might choose to rent out the property, making it a potential source of passive income.

Including the house in your estate can both improve bonds between generations and provide for the younger generation financially, as they will be able to leverage the home’s equity for their own purposes.

Here are a few ways you can pass your house and its equity to your descendants:

  • You can leave it to them in your will. This document includes instructions to distribute your assets, such as your house, to the beneficiaries you choose.
  • You can create a trust. This places your home in a legal entity that you create. The trust takes title to the house and then distributes ownership to your designated beneficiaries when you pass away or on a date you specify.
  • You can create co-ownership of the house. Joint tenancy puts your heirs’ names on your deed. Full ownership of the home passes to them when you die. There may be gift tax consequences and your heirs may pay more in capital gains tax if/when the property is sold.

Owning a home can be a tool for building generational wealth. Your house can give your children a financial advantage, as it allows them to combine your property with whatever assets they have accumulated on their own. When you establish home equity, you create a lasting financial legacy for your family, setting up your heirs for long-term success. For the best results, be sure to work with an experienced Estate attorney to determine what is best for you.

Do you have questions?

Count on your experienced team at Ericson, Scalise & Mangan, PC to provide you with sound guidance for your Estate Planning, Elder Law, Real Estate, Probate, Trust & Estate Administration, and other legal needs. For assistance, contact us today at (860) 229-0369, or email us at

a family of three sitting in front of a home