Step changed Deed from Living Trust

[penelope10]

What is the name of your state (only U.S. law)? TX

Hello to all---I am a little bit of a dummy when it comes to wills etc. My question is based on what, if any my sister and I would have in tax liability due to a deed change that once involved a living trust.

History-- my Dad has advanced Parkinson's and his wife is a diagnosed Bi-polar one. She is never going to be able to take care of herself, she has too many issues. My step sister handles their finances and has tried to have everything set up so her mother will be taken care of once my Dad passes. The house is to go to step mother and she has the right to sell the house etc. Should anything be left it will go to the heirs. Given my steps many problems there probably won't be anything left.That is absolutely fine with my sister and myself.

We want to make sure that our stepmother is taken care of and that her own children do not have to pay for the cost of this care. She's been a difficult person to deal with both for us and for her own children. While we did not grow up with our step sister, we like her and don't want her finances tied up in taking care of her mother.(Stepmother is 14 years younger than my Dad)

My Dad's caregiver told my sister and myself that she gave our step sister the head's up that my step mother was having bills sent to a mail center. Don't know how the caregiver figured this out, but anyway stepmother was running up large credit card debt.

I became concerned recently and looked up the deed to make sure everything was ok. (Based on the info from the caregiver) It looks like in 05 my step mother may have changed the deed from the living trust to a deed just in she and my Dad's name. The mailing address is a mail center not far from their home.

Frankly this worries my sister and I for several reasons. We are afraid that this may cause a huge problem down the line. My step sister, sister, and myself wanted the deed set up in a living trust so someone could not come along and take advantage of my step mother. And also we don't want to become responsible for any delinquent taxes etc should this happen.

I will probably be contacting my step sister to give her a head's up on this. My step mother is a very difficult woman and she has a somewhat strained relationship with all of us. (Step, myself, and my sister). Whatwould our legal responsibilities be now that it appears that the house is no longer deeded in the trust's name? (And step mother should refuse to change the deed back). She has not been found to be legally incompetent and that's really not a route we want to go down.

 

[curb1]

You asked, "would have in tax liability due to a deed change that once involved a living trust"?

The tax liability will not be different whether the house is in the trust, or outside of the trust.

 

[penelope10]

You asked, "would have in tax liability due to a deed change that once involved a living trust"?

The tax liability will not be different whether the house is in the trust, or outside of the trust.

Thanks, our concern was that the deed change might nullify what was trying to be done in the trust---that the property would go to step mother. And that Sis and I would not somehow end up with any liability as far as property taxes on the house.

 

[curb1]

What does this mean? You said, "We want to make sure that our stepmother is taken care of and that her own children do not have to pay for the cost of this care".

The house might have to be sold to provide money for her care.

 

[penelope10]

What does this mean? You said, "We want to make sure that our stepmother is taken care of and that her own children do not have to pay for the cost of this care".

The house might have to be sold to provide money for her care.

We absolutely understand that the house may have to be sold to take care of her. We want 100% of the proceeds from the sale of the house to be used to take care of her. She has extreme Bi-Polar which has involved psychotic breaks at least twice. (And those are just the times that I know of). Even with medication. And she will not allow her daughter to contact her psychiatrist regarding concerns she has regarding her mother's medications. And having someone found mentally incompetent is a very hard process in TX. A Living Trust was set up and the house was deeded in the name of the living trust so that the home would not be encumbered in any way. In other words, to assure that my step mother would not be taken advantage of after my Dad passed.(Or now, since the Parkinson's has affected his thinking). That any proceeds from the home would be used to care for her.

The deed name now has been changed. The home is now in both in my father and her name only. And all mail pertaining to the property is now going to a mail center rather than to their home address. My step mother also did this with the credit card bills before my step sister was notified a short while ago by my Dad's caregiver. Now our step sister is handling all of their finances which is for the best for both my Dad and stepmother. I don't believe, however, that she knows that anything regarding the home, including property tax bills are not going to the home. Or that the Deed name has been changed. As I said, it has only been a matter of months that my step sister took over the finances. And that was with her Mom kicking and screaming.

We DON'T want the house. We don't want money from the house. However, we also don't want to end up being liable for any back taxes or anything else that may end up being owed on the home either.

I just wanted to know if my stepmother created a mess by having the deed name changed. That the home would still be protected under the trust for her use and care. And if not, what are the implications for us as we are Dad's next of kin after my stepmother. We want her to have 100% of the funds from the home, but we also don't want to be liable for any back property taxes or anything else should something happen.

We are concerned that my step mother may have done something in the long run that may open herself up to being taken advantage of. I had a friend whose parents divorced. His mother was not in her right mind. She ended up marrying a guy who was an alcoholic twenty years her junior. (He was her lawn mower guy). The kids were upset because the guy was a bum who mistreated her, yet she still wanted to be with him.

To make a long story short, the guy ran through every dime of money she had except the house. And believe me, he probably would have had her sell the house and give him those funds too. The only saving grace was that the home was still deeded under she and her ex husband's name. After running through what funds he could, husband #2 left her. (They did not divorce) After about a year he died from liver failure. Her first husband signed a quit claim deed, the house was sold, and the funds were used to take care of her after paying any back taxes etc.

 

[curb1]

The trust will not give any protection from taxes. What protection are you thinking the trust will give?

You said, "However, we also don't want to end up being liable for any back taxes or anything else that may end up being owed on the home either. "

No one will be liable except the step mother.

 

[penelope10]

The trust will not give any protection from taxes. What protection are you thinking the trust will give?

You said, "However, we also don't want to end up being liable for any back taxes or anything else that may end up being owed on the home either. "

No one will be liable except the step mother.

Well then I'm probably not understanding how this works. I have a Living Trust set up for my children. Anything that is not named under the trust is not protected. I don't have a separate will.

So if I die, my property not named in the trust are subject to be split among all my heirs. Any debts that I encumbered against my home, for instance, would be owed by the estate separate from the trust (if not deeded in the trust's name). So if there were back property taxes or debts that the property was encumbered by, the property would first be sold to pay back those debts. Then if there was a short fall, what happens to the debt? And what about inheritance taxes owed to the IRS?

I would hope that as my step mothers name is on the deed, and that she is the surviving spouse, that 100% of the proceeds/debt would be hers. (And that's what it sounds like per your posts).

And as I stated I am also worried that she could possibly be taken advantage of later on with regards to the home. My Dad always took care of everything, but as his health has failed my step mother began taking over. And he simply lacks the mental competence anymore to make sound decisions himself. She is a difficult person to deal with--her daughter has been trying to help them, but my stepmother gives her hell. My sister and I would not have known anything about the credit card situation if Dad's caregiver had not told us.

I'm also worried that she may end up doing something stupid like encumbering the home while he is alive and they may end up losing it. Like I said the home is basically all that they really have financially.

 

[curb1]

It seems that you are under the assumption that a trust protects property from debts. Generally, it doesn't. If debts are owed outside the trust, they are still obligated for payment with the assets inside the living trust.

When step mother dies, debts have to be paid from the assets in her estate. When the assets have been extinguished for payment of the debts, on one else is liable.

 

[penelope10]

It seems that you are under the assumption that a trust protects property from debts. Generally, it doesn't. If debts are owed outside the trust, they are still obligated for payment with the assets inside the living trust.

When step mother dies, debts have to be paid from the assets in her estate. When the assets have been extinguished for payment of the debts, on one else is liable.

There were no assets inside the trust other than the house. The house is no longer deeded in the name of the trust. There is no separate will.

What we want is for stepmother to inherit 100% of the house to do as she sees fit. It sounds like this is what is going to happen because her name is on the deed irregardless correct?

 

[BlondiePB]

What is the name of your state (only U.S. law)? TX

Hello to all---I am a little bit of a dummy when it comes to wills etc. My question is based on what, if any my sister and I would have in tax liability due to a deed change that once involved a living trust.

History-- my Dad has advanced Parkinson's and his wife is a diagnosed Bi-polar one. She is never going to be able to take care of herself, she has too many issues. My step sister handles their finances and has tried to have everything set up so her mother will be taken care of once my Dad passes. The house is to go to step mother and she has the right to sell the house etc. Should anything be left it will go to the heirs. Given my steps many problems there probably won't be anything left.That is absolutely fine with my sister and myself.

We want to make sure that our stepmother is taken care of and that her own children do not have to pay for the cost of this care. She's been a difficult person to deal with both for us and for her own children. While we did not grow up with our step sister, we like her and don't want her finances tied up in taking care of her mother.(Stepmother is 14 years younger than my Dad)

My Dad's caregiver told my sister and myself that she gave our step sister the head's up that my step mother was having bills sent to a mail center. Don't know how the caregiver figured this out, but anyway stepmother was running up large credit card debt.

I became concerned recently and looked up the deed to make sure everything was ok. (Based on the info from the caregiver) It looks like in 05 my step mother may have changed the deed from the living trust to a deed just in she and my Dad's name. The mailing address is a mail center not far from their home.

Frankly this worries my sister and I for several reasons. We are afraid that this may cause a huge problem down the line. My step sister, sister, and myself wanted the deed set up in a living trust so someone could not come along and take advantage of my step mother. And also we don't want to become responsible for any delinquent taxes etc should this happen.

I will probably be contacting my step sister to give her a head's up on this. My step mother is a very difficult woman and she has a somewhat strained relationship with all of us. (Step, myself, and my sister). Whatwould our legal responsibilities be now that it appears that the house is no longer deeded in the trust's name? (And step mother should refuse to change the deed back). She has not been found to be legally incompetent and that's really not a route we want to go down.

Penelope, this is such a breath of fresh air from all the squibbling and step-squibbling. Kudos to y'all.

 

[anteater]

What we want is for stepmother to inherit 100% of the house to do as she sees fit. It sounds like this is what is going to happen because her name is on the deed irregardless correct?

Not necessarily. Depends upon how the deed now reads.

Of course, even if the house does not pass to stepmother via the form of ownership and your Dad's share needs to be probated, your Dad's heirs under intestacy could disclaim their interests.

Might be worthwhile for your stepsister to get a copy of the latest deeds and consult with an attorney.

 

[penelope10]

Not necessarily. Depends upon how the deed now reads.

Of course, even if the house does not pass to stepmother via the form of ownership and your Dad's share needs to be probated, your Dad's heirs under intestacy could disclaim their interests.

Might be worthwhile for your stepsister to get a copy of the latest deeds and consult with an attorney.

That was kind of what I was afraid of. I would assume that if we disclaim our interests (which is what we would want to do) then we would have no tax liability correct?

I may try to call up my step sister tomorrow as it is a holiday.The house shows as a Joint Living Trust in 2004 and changed over in 2005 to just their names. Unfortunately, that's all the info I can get online--I just want to make sure that the house remains in the trust's name if it needs to be so that none of us have a problem down the line and step mother is protected.

Prior to 2004 the house was just deeded in Dad's name. Everything got changed over once he became ill so SM could be taken care of with both my sister and my blessing. They have been married for 30 years and while she has been challenging to deal with, she deserves to be taken care of. And my step sister has been wonderful about trying to help them. No way, no how, would my step mother allow either myself or my sister to help. So we are very grateful to our step sister for doing this. My step mother can and often is nasty to our step sister. My step sister says she is doing all of the finances, handling the care giver issues etc. because feels grateful to my Dad for marrying her Mom and staying married to her. If not, she probably would have not been able to have a successful marriage or family herself. (The step brother has very little to do with his Mom). Plus my step sister has 3 adult children and 2 children still living at home. She really is a marvel---we did not really get to know each other until 2004. (None of us kids lived with my Dad or Step---we were all college age or grown when they married).

 

[curb1]

You said, "I just want to make sure that the house remains in the trust's name if it needs to be so that none of us have a problem down the line and step mother is protected. "

This does not sound right. What are you worried about "down the line" that the trust can "protect"? For some reason you keep repeating that thought. Why do you feel that the trust will protect?

 

[penelope10]

You said, "I just want to make sure that the house remains in the trust's name if it needs to be so that none of us have a problem down the line and step mother is protected. "

This does not sound right. What are you worried about "down the line" that the trust can "protect"? For some reason you keep repeating that thought. Why do you feel that the trust will protect?

I believe that my stepsister is the Trustee of the Trust. At the time of my Dad's death, I believe that the house will probably be sold and the funds used to take care of my stepmother. She will probably not be capable of living on her own.

I was under the impression that because the house was under the name of a Trust, it would be harder to encumber the property, and thus it would be harder for someone to take advantage of her. As it stands now, the house is no longer in the name of the trust. I assume that my stepmother got my Dad to sign paperwork to change the deed. He is 87 years of age, has advanced Parkinson's, and often gets confused. My step mother unfortunately has issues of her own. It is the caretaker that cares for my Dad and not my step mother. They love one another, but she is not capable of taking care of him or really herself. When he was well he took care of her.

My step mother probably was not happy with the home being set up in a trust. Not because she has "evil" intentions, but like many individuals has difficulty accepting that she cannot care for herself.

Now that the house is not under the trust, or covered by a will I was worried there could be problems. Although it does sound like if the property went into probate, my sister and I could simply refuse, or sign away our share of the home. My concern was what, if any, would the ramifications be for us tax wise. We don't want the property, don't want to inherit any funds from the property etc.
Hope that makes things clearer.

 

[curb1]

1) How would you get this back into the trust? These two people sound mentally incompetent to do anything at this point.

2) You asked, "My concern was what, if any, would the ramifications be for us tax wise."

No ramifications.

3) You said, "I was under the impression that because the house was under the name of a Trust, it would be harder to encumber the property, and thus it would be harder for someone to take advantage of her".

You said, "I believe that my stepsister is the Trustee of the Trust." That is important, but with nothing in the trust, there is nothing to be trustee. You might find out for sure.