Leaving home to my son

[tanbaby1218]

What is the name of your state? GA. i want to leave my home and property to my son when i die. what will be the easiest way? there will still be a balance on the mortgage, i'm sure.

 

[FlyingRon]

That would depend on many issues. You most likely should talk to an attorney who handles estate planning. Georgia does not permit transfer on death deeds (or the related construct known as a Lady Bird deed). A will may suffice, or a trust might be advised. Note that your son will still be responsible for paying the mortgage if he intends to retain ownership. The good news, is they can't usually call the loan as long as payments are made.

In addition to dealing with the house, the lawyer can set up a will to handle any remaining assets. Also powers of attorney (durable and/or medical), advanced directives (living will), and the like can be drawn up at the same time, often at a package price.

The one thing you DO NOT want to do is "put him on the deed" now. This is not estate planning. It is giving him immediate irrevocable ownership of half the property. It has bad implications for both you and him if you do this.

 

[tanbaby1218]

That would depend on many issues. You most likely should talk to an attorney who handles estate planning. Georgia does not permit transfer on death deeds (or the related construct known as a Lady Bird deed). A will may suffice, or a trust might be advised. Note that your son will still be responsible for paying the mortgage if he intends to retain ownership. The good news, is they can't usually call the loan as long as payments are made.

In addition to dealing with the house, the lawyer can set up a will to handle any remaining assets. Also powers of attorney (durable and/or medical), advanced directives (living will), and the like can be drawn up at the same time, often at a package price.

The one thing you DO NOT want to do is "put him on the deed" now. This is not estate planning. It is giving him immediate irrevocable ownership of half the property. It has bad implications for both you and him if you do this.

i went to the bank that holds my mortgage and the woman i spoke to said to put it in the will...i just want it to go as smoothly as possible, i would hate to think that i have dumped all those years of money into a house that the bank is going to demand full payment upon my death. that is what i don't want. i have the power of attorney and living will filled out, ready to be signed and notarized. that responsibility will fall upon my daughter in law..

 

[FlyingRon]

Federal law prohibits them from calling the loan solely because it is transferred to your child on your death.

 

[Taxing Matters]

The one thing you DO NOT want to do is "put him on the deed" now. This is not estate planning. It is giving him immediate irrevocable ownership of half the property. It has bad implications for both you and him if you do this.

I disagree on both counts. Joint ownership is indeed one of the tools for estate planning and there are circumstances in which a person would indeed want to do it. It does not always, or even most of the time, result in "bad implications" for both people, or even one of them for that matter. I've had clients use joint ownership successfully. The key to doing estate planning right is understanding your various options, picking the best options for yourself, and then doing what you can to mitigate the downsides of whatever way you decide to go. Joint ownership is no different. Yes, the other person does become an immediate owner of the property. And in some situations that can definitely be undesirable. In others, though, it might be just what you want. The specific circumstances matter a great deal in determining what estate plan is going to work best. And we certainly do not have all that information here.

 

[FlyingRon]

OK, I will couch that with he doesn't want to do so without legal advice. We get someone in here each month complaining they put some person on the deed and now need to undo it.

The upsides are that it does avoid probate and may give some immediate benefit to the child. (eitther way Garn/St. Germain bars the loan being called). The downsides are many:

1. Not revocable.
2. The son gets the parent's basis on the gifted rather than inherited part.
3. Bars the parent from getting a reverse mortgage if the son isn't suitably old.
4. The joint tenancy can be broken by the son.
5. The son can't likely be evicted if he moves in.

 

[Taxing Matters]

The downsides are many:

1. Not revocable.

In some circumstances that is a benefit, not a downside.

2. The son gets the parent's basis on the gifted rather than inherited part.

That is true if the parent and son own the property as tenants in common (TIC) at the time the parent dies. But it is not true if they hold it as joint tenants with a right survivorship (JTWROS). In the case of property held JTWROS in which the son obtained his interest in the property as a gift from the parent then under Internal Revenue Code (IRC) § 2040 the entire value of the property would be included in the parent's gross estate for federal estate tax purposes with the result that under IRC § 1014(b)(9) the son would get a basis in the property that is equal to the fair market value (FMV) of the property on the date the parent died less any deductions the son took for depreciation on the property prior to the parent's death. Of course, if the son never rents out the place prior to the parent's death then there will be no depreciation to worry about. Whether it is a good idea to have the property included in the gross estate for estate tax purposes in order to get that step up basis depend's on the projected value of the parent's estate at death and how much unified credit against estate and gift taxes the parent is expected to have to cover the estate.

3. Bars the parent from getting a reverse mortgage if the son isn't suitably old.

That may be true. And would be an issue if the parent thinks he or she wants a reverse mortgage. However, I am of the view that reverse mortgages are, for the most part, bad deals and very rarely recommend them.

4. The joint tenancy can be broken by the son.

That's true in most states. However, whether that is a problem depends on the circumstances. For the most part it's not a problem for the parent unless there is a significant risk the son dies before the parent and the parent would want that interest in the property back in that circumstance.

5. The son can't likely be evicted if he moves in.

That part is true. But is only a problem if the parent would want to kick his kid out. That too depends on the circumstances. How good is their relationship? How likely is it that the kid would move in? Does the kid have any problems that might indicate that living in the house would be a problem?

I'm not saying that the OP ought to go this route or that is the best route for most people to take. But it is certainly an option to be considered and for some people it is the best choice.

OK, I will couch that with he doesn't want to do so without legal advice.

That part I'm totally fine with. Estate planning can involve lots of different options, and most people don't know what all those options are or the benefits and drawbacks of each in order to make a truly informed decision about the best way to go. Seeing an estate planning attorney is useful for getting that information and advice on how best to proceed.

 

[TrustUser]

i also think that it is VERY RARELY a good idea to put a child on your deed, before you die. of course, i also do not like wills.

i do not get the idea that the op is gonna see a lawyer. he already has his living will and power of attorney ready to go.

so unless he could give me an exact specific reason why putting his child on the deed before he died was a good idea, my advice would be not to do so

 

[TrustUser]

in all my years on this site, i have never seen even once someone write "gee, that is too bad the child was not placed on the deed before the owner died".

on the other hand, as ron mentioned, we have all lost count of the number of times when the reverse was said !!

 

[Taxing Matters]

in all my years on this site, i have never seen even once someone write "gee, that is too bad the child was not placed on the deed before the owner died".

on the other hand, as ron mentioned, we have all lost count of the number of times when the reverse was said !!

The problem is that with sites like this one is that all you hear are the tales of things that have gone bad. You never hear about the many other times a person has had success with something. And in particular, with estate planning, we pretty much never hear about whether what the person who made the estate plan did worked out well for him/her because by the time that becomes apparent that person is dead. Basing any conclusion simply on the basis of hearing only the complainers gives you a very biased data set and from that you'll not be able to draw good conclusions.

I've advised a number of clients through the years and for some of the joint ownership of property was in fact a great solution. It worked well for them without the horrors that some disappointed heirs coming here to post have complained about. I've also recommended and assisted clients with wills, which again worked out just fine for those clients. It may not work for you, but you are in a different state with different circumstances. You seem to still be resistant to the idea that state laws vary, that each person's circumstances and goals are different, and that a method that works well for you in your situation in the state of CA may in fact not be a good way to go for someone else in another state with different circumstances. But I can tell you from experience in doing estate planning that due to differences in state law and circumstances different people will need different kinds of estate plans.

 

[adjusterjack]

Here's another option. Sell the house. Move to a state that has transfer on death deeds, buy another house, record a transfer on death deed. Problem solved.

 

[TrustUser]

i agree with you about the bias of the complainers. but i was really talking about the posters on this site, trying to help. i dont recall even 1 poster making that sort of comment to anyone (i.e. how it would have been better had he been put on the deed before his parents died).

i only recall you for the past couple of years ? i have been a member for a long time. it could easily be 10 years, by now. so you would think that over that great of a timespan, i would have heard it a few times, if it was really that helpful. i still suspect that we are talking about a very small percentage of instances in which that would be the best way to go.

i have done a lot of research in the past.

truthfully, i cant recall finding even one article about how it is a good idea to put your child on the deed. whereas there are literally hundreds that emphatically tell you not to do so. i dont think all of these articles were from california.

it is not that i dont realize there are various options for people. and if you dont have that much, i suppose it is not that important.

but i do still think that trusts are by far the best way to do things. and it has nothing to do with me being in california. because i am not basing my conclusion on saving probate costs. although i admit that is a bigger benefit for a californian than most other states.

i like trusts mainly for keeping them as ongoing entities, that help the children with an extra monthly stipend. no other vehicle does this well.

and i am sure you tell your clients about it. but the overwhelming majority of people are not aware of this facet of a trust. so few people ever take advantage of what i consider to be the best quality about them.

in a generation, i think this will change. i do my part by telling people about them, when i can. there are a number of people who are aware that i am trust savvy.

i have gone to several of the trust seminars, when i was just learning. attorneys selling 500-750 packages. and it doesnt take much to make a trust that distributes upon death. i refer to them as glorified wills. a way to give your assets away without using probate. none of the seminars ever mentioned trusts that go on after death.

i am not sure that these attorneys were even aware of that. and i would say that the overwhelming percentage of people who get trusts, end up purchasing the trust from one of these types of seminars. they are common, you receive ads from someone in your snail mail almost weekly. they are relatively inexpensive, and convenient in that you can usually find a seminar within a couple miles of your home.

and i can also say that i have never talked to anyone that knew about this facet of trusts before i told them about it. yet after i tell them, just about everyone went out and got that sort of trust. cuz parents by far and away want to make sure their kids can be provided with the necessities, if necessary.

it used to be an advantage from a tax standpoint. but trump has eliminated the death tax for the first 10 million or so. so that no longer applies to anyone in the average joe category.

we always seem to have different opinions on everything. but i guess that is a good thing !!

 

[Taxing Matters]

and i am sure you tell your clients about it. but the overwhelming majority of people are not aware of this facet of a trust. so few people ever take advantage of what i consider to be the best quality about them.

Then it may surprise you that the vast majority of my clients simply have no interest in controlling their kids to that extent. So despite being informed of that option, they elect not to do it. They simply want to give their kids their inheritance outright and let the kids do what they think best with what is now theirs. This highlights one of the factors I mentioned before: each client has different circumstances, and has different goals. What you like and that goals you have will be different from what others want.

i am not sure that these attorneys were even aware of that.

They likely did know it. And they also likely have experienced what I have experienced: that is not what the vast majority of people are interested in doing.

I however dislike a lot of those trust sales seminars because they tout trusts as being the only real option for estate planning and do not much highlight the downsides of trust and rarely do they mention alternatives to trusts other than to bash wills. In short they don't do an objective presentation.

 

[Edgar 1776]

You have a few options here.
You can make a basic will leaving the house to your son
You can set up a trust which would avoid your son having to go to probate court.
You can transfer the house to your son now with you keeping a life estate (you live there until you die)

 

[TrustUser]

hi tm,

i really dont see much of a downside to a trust. are you counting the one-time need for re-titling ? i suppose that is a bit of an inconvenience. but if that is your biggest downside, i dont think you have much to fight with !!

if a person is not gonna have the trust live on, then he can prepare his own trust for no money at all, if he wants to. most any trust will do the job of being a glorified will.

i now have a lot of experience with trusts. not only writing them, but being the trustee of my own, and my parents.

i have had to deal with most all sorts of trx that an average person is gonna see in their lifetime.

i dont see any other way as being anywhere near as good an option

and all my distribution desires are in one document

i do think i will end up giving money to friends, etc. i can either do that in person, or set up a bank acct, with them as a tod

that way i do not kluge up my trust with unneeded beneficiaries, and language, etc.

truly, i do not think that most of these attorneys know about the live-on trust. or at least they do not have a trust document to support it - that sort of trust does need a document with a spendthrift clause, and many other clauses to deal with a business entity that survives.