Unsure whether to use a will for home being split for sons

[Edbo71]

My mother of 80s years is going on a trip to South America. Me and my brother are trying to set up a payment to try and get one of those online simple wills with everything being split evenly to 3 brothers since we all live in the same family home (in Virgina) and pay for everything (including her trip) just in case something happens.

However, looking at the online site and doing alot of reading, I now realize that one of my brothers is on the deed with my mothers name. This was done years ago (I assume) in order for a smaller bank mortgage loan for additional structures added to the existing home. (the loan is still current)

We all get along and have no bad blood between us and know we all should get a fair share equally. However, being on a joint ownership (and Im guessing its survivorship since hes a son?) Me and my other brother are now concerned that upon the death of our mother, that our brother would be the sole legal owner and that any other siblings are out.

So before dishing out some money on an estate lawyer, is it a bad idea to still go with a will and try to go with some other legal way? All of us are now wondering since we wanna work this out fairly so all of us can own it.

 

[Taxing Matters]

So before dishing out some money on an estate lawyer, is it a bad idea to still go with a will?

Not necessarily. A lot will depend on two things: (1) what other assets your mother has that is of monetary value and (2) the state in which she resides. Some states make probate a long expensive process, others, like mine, make it more streamlined. Moreover, state property laws differ and that can make a difference in this case.

Your brother who is on the deed might not automatically get your mother's share. In most states that will depend on how the deed title is written. If the deed expressly states that they own it as joint owners with a right of surviorship then he would indeed get your mother's share the moment she dies. On the other hand, if the deed expressly states that they own it as tenants in common, her share of the house would go to her estate and your brother's share would remain with him. If the deed does not expressly state how it is owned, you'd have to look at the law of the state in which the property is located to find out which of the two is the default rule.

In any case neither of those two forms of ownership help achieve your goal of dividing the estate one-third to each of you. It is also not good from a tax standpoint either. Changing her will now won't solve the problem by itself; your brother would need to give part of his share of the property back, too. Ideally he would give back all of his interest to your mother so that she is the sole owner of it again. Then her will could be changed (or the house put in a revocable living trust) to give equal shares in her estate or trust to each of you. Then we she dies, the tax basis of the entire home will be reset to fair market value (FMV), wiping out all the tax gain that has built up over the time your mother has owned it. Right now, as things are set, your brother's half wouldn't get the step up in basis, which could mean paying a lot more tax than you'd collectively pay if you change it so Mom owns all of it (or her revocable living trust does) at the time she dies.

You'd all benefit from sitting down with an estate planning attorney to explain the situation and give him/her a copy of the current deed. The attorney then can tell you the best way forward to meet your goals at the least cost given the probate and trust laws of your mother's state. I suspect that in the end setting up a revocable living trust will likely be the better option. That bypasses the probate process and allows the trustee to begin immediately with what the trust instructs the trustee to do with the property. The trust is also private; a will once filed with the court becomes a public record that anyone can see. Trusts also provide a lot more flexibility in how and when the trust assets are to be distributed.

 

[zddoodah]

My mother of 80s years is going on a trip to South America. Me and my brother are trying to set up a payment to try and get one of those online simple wills with everything being split evenly to 3 brothers since we all live in the same family home (in Virgina) and pay for everything (including her trip) just in case something happens.

FWIW, unless your mother is married, that's what would happen if she dies without a will.

Me and my other brother are now concerned that upon the death of our mother, that our brother would be the sole legal owner

If, in fact, your mother and brother own the home as joint tenants with the right of survivorship, that's exactly what would happen (regardless of any will).

So before dishing out some money on an estate lawyer, is it a bad idea to still go with a will and try to go with some other legal way? All of us are now wondering since we wanna work this out fairly so all of us can own it.

If your mother and the three of you all want the same result, there are multiple ways to make it happen. I suggest you all consult with a local attorney to determine what's best under all of the relevant facts and circumstances.

 

[Edbo71]

FWIW, unless your mother is married, that's what would happen if she dies without a will.




If, in fact, your mother and brother own the home as joint tenants with the right of survivorship, that's exactly what would happen (regardless of any will).




If your mother and the three of you all want the same result, there are multiple ways to make it happen. I suggest you all consult with a local attorney to determine what's best under all of the relevant facts and circumstances.

Yeah, its the same conclusion I was thinking also. Thanks

 

[Edbo71]

Not necessarily. A lot will depend on two things: (1) what other assets your mother has that is of monetary value and (2) the state in which she resides. Some states make probate a long expensive process, others, like mine, make it more streamlined. Moreover, state property laws differ and that can make a difference in this case.

Your brother who is on the deed might not automatically get your mother's share. In most states that will depend on how the deed title is written. If the deed expressly states that they own it as joint owners with a right of surviorship then he would indeed get your mother's share the moment she dies. On the other hand, if the deed expressly states that they own it as tenants in common, her share of the house would go to her estate and your brother's share would remain with him. If the deed does not expressly state how it is owned, you'd have to look at the law of the state in which the property is located to find out which of the two is the default rule.

In any case neither of those two forms of ownership help achieve your goal of dividing the estate one-third to each of you. It is also not good from a tax standpoint either. Changing her will now won't solve the problem by itself; your brother would need to give part of his share of the property back, too. Ideally he would give back all of his interest to your mother so that she is the sole owner of it again. Then her will could be changed (or the house put in a revocable living trust) to give equal shares in her estate or trust to each of you. Then we she dies, the tax basis of the entire home will be reset to fair market value (FMV), wiping out all the tax gain that has built up over the time your mother has owned it. Right now, as things are set, your brother's half wouldn't get the step up in basis, which could mean paying a lot more tax than you'd collectively pay if you change it so Mom owns all of it (or her revocable living trust does) at the time she dies.

You'd all benefit from sitting down with an estate planning attorney to explain the situation and give him/her a copy of the current deed. The attorney then can tell you the best way forward to meet your goals at the least cost given the probate and trust laws of your mother's state. I suspect that in the end setting up a revocable living trust will likely be the better option. That bypasses the probate process and allows the trustee to begin immediately with what the trust instructs the trustee to do with the property. The trust is also private; a will once filed with the court becomes a public record that anyone can see. Trusts also provide a lot more flexibility in how and when the trust assets are to be distributed.

Definitely gonna have to get an attorney. I had no idea it could get so complicated.

But thinking theoretically, couldn't simply adding me and my younger brother to deed solve this? (albeit adding some risk to the whole thing)

 

[doucar]

You can't be "added" to an existing deed, it would take a new deed and then you could forfeit the tax advantages mentioned by Tax.

 

[LdiJ]

Definitely gonna have to get an attorney. I had no idea it could get so complicated.

But thinking theoretically, couldn't simply adding me and my younger brother to deed solve this? (albeit adding some risk to the whole thing)

Yes, theoretically a new deed listing all three of you could potentially solve the problem, but as Doucar mentioned, it would create other problems. A lot would depend on what the three of you wanted to do with the house. If the three of you all want to live there, on a long term basis, then the tax issues are kind of irrelevant. If the three of you would want to sell the house and take your cash, then the tax issues are very important.

 

[zddoodah]

But thinking theoretically, couldn't simply adding me and my younger brother to deed solve this? (albeit adding some risk to the whole thing)

As previously noted, you cannot be added to an existing deed. Your mother and brother could execute a deed that transfers their ownership interests to all four of you as joint tenants with the right of survivorship, and that would appear to get you the result you seek as far as the ownership goes. However, I suggest you pay heed to the potential tax ramifications of a transfer of ownership, as noted by "Taxing Matters."

 

[Taxing Matters]

Definitely gonna have to get an attorney. I had no idea it could get so complicated.

But thinking theoretically, couldn't simply adding me and my younger brother to deed solve this? (albeit adding some risk to the whole thing)

That would require your mother and the brother that co-owns the property creating a deed in which the ownership shares are changed to achieve the result you want. But you'd potentially make the tax problem even worse by doing that. When your mother dies, only her share of the property will get the basis adjustment to fair market value (FMV). The smaller the share she owns at death, the less of the property that will get that tax benefit. That's why the ideal arrangement for tax purposes is for her to be the owner (or considered the the owner for tax purposes by owning it through a LLC or revocable living trust) of ALL the interest in the home. That way when she dies, the basis in the entire property gets reset to FMV and wiping out all the capital gain that had accrued in the home just prior to her death. While tax should never be the only consideration in deciding a given transaction, it should be taken into account. In the situation you have, it is possible to achieve the goal you say you want of all brothers being equal owners of it and get that step up in basis to FMV. But adding more brothers to the deed would not accomplish that, and could make the tax situation worse. There are at least two, and in many states at least three, ways to set this up to both get the full FMV basis adjustment and have you all as co-owners. And there is at least one option in every state to do that and avoid the property going through probate.

The challenge now is how to arrange the changes that are needed without engaging in a transaction that will itself generate more tax to pay. An estate planning attorney with good knowledge of the tax laws that affect estate plans, a tax attorney who is also knowledgeable about estate planning, or consultating a combination of an estate planning attorney and tax attorney (ideally from the same law firm) can give you the advice needed to choose the lowest cost way to set this up and help with drafting and filing the documents needed to do it. What you pay for that advice may end up saving you and your brothers many thousands of dollars in tax that you'd pay if you don't get it right.

 

[luisaluisaflores97]

A will may not necessarily override joint ownership or survivorship rights, especially if the property deed specifies these terms. An attorney can guide you on the best legal approach to ensure a fair distribution among siblings.

 

[quincy]

Right above your post, luisaluisaflores, was a response from an attorney. A real person, site-vetted. If you intend to go through the forum with AI generated responses, please note in your posts that the content is AI-generated. Thanks.