Q: My father is in his 90s and he accumulated some real estate (about $4 million). For some reason, somebody gave him advice to assign this house to his three sons (including me). Now he's afraid that when he dies, the taxes will be too big. Was that the right thing to do?

A: Your father may have received terrible advice. Here's the situation: If your father owns real estate (or any other asset) in his name only and he has a huge profit in that asset, he'll pay capital gains tax if he sells that asset. If he dies owning the asset, the asset will transfer to his children free of capital gains tax. It's called a step-up in basis.

Adding your name to his asset could create a big tax problem because adding your name to the deed (or to a bank or brokerage account) converts you from heir to owner. That means you would receive the asset with your father's cost basis intact, forcing you to pay capital gains taxes when you sell the asset.

It's possible that other aspects of your father's situation justify this move. For example, we're talking here about the capital gains tax. But we've not considered the estate tax -- and some strategies that avoid one tax trigger the other.

Ideally, we'd want to develop strategies that minimize both. But that can be hard to do in some situations. So I strongly encourage you to take your father to an estate attorney.

My point here, though, is that, generally speaking, titling assets between generations is usually a bad idea.

Q: We recently came into an inheritance. It's around $170,000, and we have some home improvements that we've been wanting to make for years that are going to cost about $60,000. Our thinking was to invest the $170,000 and use the interest to pay off a line of credit that we would use for the home improvements.

A: Excellent strategy! There is no reason to give up the cash. As you've obviously figured out, the $170,000 you're receiving is a one-time event. If you give that money to the contractors, you'll never see it again. You'll regret it if you find yourself out of work or facing major medical expenses. That's why you are better off holding onto the $170,000. Simply invest it carefully so it remains available to you as needed.

Q: I own my home outright in Maryland. Its value has more than doubled since I bought it in 1992. I am currently unemployed, but I have managed to live off my modest investments. If I sold my Maryland home for $425,000 and bought a comparable one in Florida for $100,000, where the prices have really suffered, I could have that extra money to invest and finally afford health insurance. My concerns are: 1) Florida property taxes are much higher, but I would have enough invested to cover that. 2) Insuring a home in Florida is expensive, if not impossible at times. 3) If I hold the home in Florida long enough, I feel that values would return. What do you think of this strategy, and how do you feel about buying real estate in Florida?

A: Never buy a residence primarily for investment purposes. Instead, choose it for lifestyle reasons. If you like the idea of living in Florida, and if you plan to live in the house for 10 years or more, then I'd support your plans because current prices won't matter a decade from now. So make sure you truly do plan to live in the house for that long and that you can easily afford to do so.

Although all this seems clear from what you wrote, you might benefit nonetheless from talking with a financial adviser to make sure. Finally, do consider the benefits of a mortgage. It will further boost your cash reserves, which could come in handy.

Financial Adviser Ric Edelman is the author of several best-selling books about personal finance, including "Ordinary People, Extraordinary Wealth" and "Discover the Wealth Within You." You can e-mail him at money@ricedelman.com.