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My Aunt has Manipulated my Granddad, Now what?

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wymzie

Junior Member
What is the name of your state (Maryland)?
My Grandparents had 3 children.
My mother, my Aunt and my Uncle.
My mother passed away in the 80's.
My Uncle passed away in the 90's.
My Grandmother stated before she died that she wanted her daughter to get 1/2 of estate and the rest equally divided between the grandchildren (3) and great grandchildren (7), then had will made to that effect.
My Grandmother passed in 2001.
My Grandfather told me under the advise of his attorney and the recommendation of my Aunt he changed the will to make my Aunt and I equal trustees to a Revocable Trust which he made.
Grandfather moved to live closer to me and purchased second home. First two years he goes between the two houses, then decides to stay near me full time.
Aunt lives in FLA and visits once or twice a year. I take care of all of his needs on a weekly basis (doctors appts., grocery shopping etc. until last March when I had heart attack)
2004 my daughter asks Grandfather to co-sign student loan for college. He does.
2005" "
2006" "
2007 I become ill and he says he wont co-sign anymore loans.
Loan companies call him and tell him since my daughter is now out of school he will have to make payments.
He Freaks out that credit will be ruined and Calls my Aunt and Me.
I tell him my daughter will make the payments, and if she doesn't he is 94 years old and not to worry about his credit.
Aunt tells him that his credit is very important and convinces him to pay the loans in full.
He does.
$50,000.
I told him that we would work out a payment plan with my daughter and take care of it.
Grandfather spends winter in FLA with daughter.
Our business suffers terribley because of economy (real estate)
I write to Aunt and tell her that I will compose a letter in my hand that upon Grandfathers death $50,000. will be taken out of my portion of the estate and given to her.
She never responds.
When Grandfather comes back from FLA I tell him same thing to assure him that even if we weren't able to pay the amount entire amount back before he passed I wanted him to know that I would do the right thing and make sure that Aunt would get the equivalent from estate.
Grandfather responded surprised and said he had never thought about that, but had changed the will.
I responded with a Giant ????OH.
He said that I would get the house near me but changed it back to the way my Grandmother had wanted it with Aunt getting half and the rest diveded between grand and great grandchildren.
OK.
Last week Granddad has heart attack and pulls through.
I went to see him and he said that he wanted me to get a lawyer and see about putting the house in my name, because he wanted to tie up loose ends since he didn't think he had much time left.
He said it might be cheaper for me to do this now instead of when he dies.

Here's my three part question:
If house is in a trust stating that I get it when he dies...why do I need to do this now?

If I do need to do this now, he stated concern over capital gains and suggested I look into the best way to do this financially. Any suggestions?

Could he just sell it to me for what he paid for it, I make monthly payments then have contract say that debt is forgiven upon his death?

He paid $69,000. in 04' and it is in worse shape than it was when he moved in as he has not made needed repairs.

Help!!!
 


divgradcurl

Senior Member
If house is in a trust stating that I get it when he dies...why do I need to do this now?
It's a revocable trust -- he can revoke it. But still, it's pretty poor planning to transfer stuff while still alive, much better (from your perspective) to use a trust or probate.

If I do need to do this now, he stated concern over capital gains and suggested I look into the best way to do this financially. Any suggestions?
Let the house go through probate.

Could he just sell it to me for what he paid for it, I make monthly payments then have contract say that debt is forgiven upon his death?
You would likely be liable for income tax on the forgiven part of the loan -- check with an accountant or estate planning professional.

What does any of this have to do with "manipulation?"
 

wymzie

Junior Member
I feel that it is manipulation because the trust already stated that the house was mine, but now before he dies he wants me to take possession. This, I feel is contrived by her.

What was the point of have me as a trustee and going through motions of writing a trust, paying a lawyer etc. only then to have to deal with this before he dies.
 

cmore299

Junior Member
I am on this site to learn helpful information like yourself, but had wanted to suggest something, since I went through almost the exact same thing a year ago...

Maybe your grandfather told you to get an attorney because he isn't EXACTLY sure what he did when he changed things "back". He could have had a pile of documents in front of him and just signed something because he thought or was told to. Now, he is hinting to you to double check his actions, because he is not 100%. Maybe you need to review that current document or have another one drawn up to make sure everyone involved is on the same page. Just a suggestion, I am no expert, like the others that post on here.
 

wymzie

Junior Member
Thanks Cmoore,
My sister in law just told me the same thing.
I'm going to call Granddads attorney tomorow to see if he will at least give me some ideas on what is going on. If I don't get anywhere, I will be looking for a local attorney, with this specialty.
 

wymzie

Junior Member
divgradcurl,
Thank you for responding!
What are the benefits of letting the house go through probate? Instead of buying it now? Or merely just transferring it into my name.
 

divgradcurl

Senior Member
divgradcurl,
Thank you for responding!
What are the benefits of letting the house go through probate? Instead of buying it now? Or merely just transferring it into my name.
If the house goes through probate, then the basis is "stepped up" to the fiar market value at the time of death. If you want to sell the house later, this can have a big impact on the calculation of capital gains for tax purposes, assuming that the house has increased in value since the grandfather purchased it.

If you purchase the house, then the basis is changed to the purchase price -- if the grandfather gives you a great deal, then you may still have a low basis, and a capital gains issue down the road. If the sale price is fair market value, then the basis will be about the same as if it went through probate. But if you set if up so that the load is forgiven upon death, then you will likely have to pay taxes on the "forgiven" part of the loan -- anteater would know the details here.

If the house is given to you, then the basis is whatever your grandfather paid for it originally, and you still have the potential capital gains issues. Plus, if your grandfather has an estate that is larger than (or close to) the limit for estate taxes, the gift tax return he would need to file could have an impact on estate taxers that are owed.

Whether or not any of these things are issues in your particular case will depend on what the original house was purchased for, what it is worth now, and the size of the projected estate.
 

Dandy Don

Senior Member
Did the 3 grandchildren and the 7 great grandchildren receive anything from grandmother's estate when (IF) it was ever probated or have they received nothing at all? Grandfather does not have to agree to her wishes and had the right to revise his own will.

If he is willing to show you a copy of the trust and a copy of the will to present to your attorney to help get everything straightened out it would help your cause.

Everything depends on whether he wants to give you the home or sell it to you. If he wants to give it to you, he can quitclaim it to you. He will have to have the title to the home taken out of the trust. You may need to get an official appraisal of how much the home would sell for if it was ever sold.

Do you know the value of the trust and what assets are in the will? Did an attorney help him draft the trust and the will? There is a potential problem here--the trust and the will are legally considered and administered as 2 separate documents, and ideally there should be no language or conditions in the will that relate specifically to the trust. If there is a problem with interpretation, the will has no power over the trust and the instructions in the trust override anything. If all assets are put in the trust then the will is simply a pour-over will to potentially cover anything that may have been left out of the trust by mistake. IF he has any doubts about his will and his trust are going to be interpreted he needs to let someone else take a look at those documents to see if everything is clearly understood and if not get it corrected now. Hopefully he had an attorney draft these documents for him.

The provision about the $50,000--you should ask him to put a provision in the trust that specifically states that because your offspring was given the $50,000 to pay off the loans, that your inheritance is reduced by that amount and that aunt's inheritance is increased by that amount. Do you even know if there is enough money in the trust that you would have even received the $50,000 or more than that in the first place?

Why is he asking you to bear the burden of these changes? If there is enough money in the trust he or his attorney can accomplish these changes and pay for them himself without involving you. Of course an accountant can give you a document that calculates what the capital gains will be and you can then decide if you can afford this expense or not.

DANDY DON IN OKLAHOMA
 

anteater

Senior Member
.... But if you set if up so that the load is forgiven upon death, then you will likely have to pay taxes on the "forgiven" part of the loan -- anteater would know the details here....
That there is a dangerous assumption. (I got lost about halfway through the student loan.)

There wouldn't be an income tax problem. It would be the same as loan forgiveness intended as a gift.
 

wymzie

Junior Member
WOW!
Thats a lot to chew on! Thank you for so many responses. I didn't even think I would get one response.
Sorry I gave so much detail, but I thought it was important in order to get an informed answer.

Grandmother and Grandfather had Revocable Trust set up before her death. After her death it was changed to a Trust just for him.
Yes, trust was done by attorney.
Yes, wants to give me the house.
House was purchased in the name of the trust.
Paid $69k in 04'
Assessed this year at $84K
 

Dandy Don

Senior Member
The assessment doesn't mean very much--that's only what the county property tax assessor values it as, at inflated valuation, so they can charge the most property tax. You will need to pay for an official appraisal only if you plan to sell the home or to get a reasonable figure to base the capital gains on for tax purposes--if you are not going to sell it then you may not need the appraisal.
 

wymzie

Junior Member
Don,

I don't plan on selling anytime soon. Our county adopted a new assesment so that things are assessed at the market value now and are phased in over a period of years. Folks here are going nuts, especially with the huge decline in the market. We are located in one of the areas of the country hardest hit in the meltdown and prices are still dropping.
My husband is a real estate auctioneer and he and I were thinking that maybe on a good day it would bring $100k.
 

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