Changes to a deed..Update post #9.. A change in thoughts?

[C.Ann]

If you add a name to your deed, is this something that can be done just via the county - or does it require an attorney to draw up a new deed with the additional name/names added on it?

Thanks!

 

[Darcy03231]

Where I live you can do it yourself and file it with the county, if you know how. County is very picky about how deeds are done and they must conform to certain criteria.

I would recommend having an attorney do it. Around here it costs about $75-$100 plus the filing fees.

 

[C.Ann]

Where I live you can do it yourself and file it with the county, if you know how. County is very picky about how deeds are done and they must conform to certain criteria.

I would recommend having an attorney do it. Around here it costs about $75-$100 plus the filing fees.

Thanks.. Guess I'll call the county tomorrow and see what they require..

 

[barkley]

if there's a mortgage on the property you also need to contact the lender-they may have a particular process you have to follow (and some have clauses that preclude you from changing the deed in any manner prior to payoff without their approval). you also might want to look into weather where the property is located, if adding someone to the deed will create a tax issue (in our neck of the woods you realy need legal advice because unless you do it the right way you either end up dealing with the irs on 'gifting' implications or paying out state excise taxes for the 'consideration' you are receiving on a non gift).

the other thing you might have to do is check with any company that insures the property. i know an issue came up with a friend of my mom's when she added her adult children's name to her deed (in an attempt to avoid probate when she passed) and her homeowner's insurance rates went up because the rates are based in part on the claims history of all the legal owners (and apparantly at least one of her adult children had made legit but costly claims in recent years on their privatly held home).

 

[dakcp2001]

My mortgage company required a 200 fee, and then there was another fee (I think to the city) for 150. So we just left it in one name instead of two.

 

[kymmyk13]

I would have an attorney draft the new deed, you should not have to pay over $100.00, it is well worth it. If you try it yourself and it is not correct, it will cost you alot more later on. I have been a paralegal for 15 years and have seen the mess someone can make with trying to do it themselves.

 

[PghLybrt]

When i put my girlfriend on our deed we also had to pay the taxes for 50% of the property. The reason, we are not related. However if we had the ability to be married it would have only been around the $75 fee.

 

[manning]

Once a deed is filed it has served its purpose. It's the filing of the deed that counts. As a matter of fact you can make out more than one deed to different persons. The one that files first gets the property in the eye of the law. The owner is the one shown on the records in the recorder office.

 

[C.Ann]

Okay.. A little update here.. I talked to a friend up here who recently did something that I'm considering doing now (through a lawyer) and it seems that might be the best way to go.. His fee actually wasn't that much for the changes to the deed (well - in her case 2 deeds to 2 different properties) - the filing fee with the county was actually higher..

Her DH passed away last year - and they only had one child.. So what she did was to sign over her house and her seasonal place to her son - with a "lifetime tenancy" clause on both for herself...

I would like to do the same with my place here at the lake (the only real estate property that I own now) and while I'm at the lawyers office anyhow, get a POA in place in case it's needed in the future.. (Like I'm critically ill and someone has to be able to sign checks and have access to my bank accounts to pay my bills and such..)

I won't do anything - without consulting a lawyer.. After thinking on it overnight, I decided I'm a little too skiddish (and a little too "OCD-ish") to take that chance..

Does this sound more reasonable than just "adding" names to the deed?

Thanks for the responses..

 

[SandrA9810]

Having some one else with legal powers is always a good choice, as long as the person is extremely trusted.

My aunt has POA with my grandmother, and it costed about $400 each to draw up the papers. Living will and wills were drawn up at the same time for both of them. So lots of legal matters were taken care of all at once.
You also want to do this prior to anything happening to you. 10 years ago, my grandmother was in better health, better memory. She knew everything that was going on around her, and what she was doing. If my aunt tried to do it now, the lawyers could say that my grandmother is not in a condition to understand what she is signing. Then she would have to go through the courts to get guardianship and prove she is worthy of taking the best care of my grandmother.

You can never tell how fast things can go downhill, or if anything should happen suddenly. It's best to have a plan in place.

 

[msmayor]

Personally...I wouldn't do it. I would not just sign over the deed to my house, even to my child.

Suppose something happens and you need to gain access to cash? If the home was still yours, you could tap into the equity. If your name isn't on the deed, you're out of luck. You can't access equity that no longer belongs to you...and your child may not be in the best financial position to obtain access to the equity and give it to you.

Nope. My kids can get my house when I'm dead and gone and don't need it anymore.

 

[Cheshire Figment]

Several financial reasons why it should not be signed over to an adult child.

1. It will trigger a Federal Gift Tax Return.

2. The basis of the house for the child is the same as your basis. If it is transferred as a result of dedath of the prior owner, the new owner get the basis as the Fair Market Value at date of death.

For example, if the property cost you $100,00 and you transfer it when the FMV is $500,000 the child's basis is still $100,000. Let us say the value at time of death is $1,000,000. And the child sells it for $1,100,000. If you had given it as a gift the taxable amount for the child is $1,000,000 but if the transfer was on death then the child is only liable for taxes on $100,000 of the saled.

 

[C.Ann]

Several financial reasons why it should not be signed over to an adult child.

1. It will trigger a Federal Gift Tax Return.

2. The basis of the house for the child is the same as your basis. If it is transferred as a result of dedath of the prior owner, the new owner get the basis as the Fair Market Value at date of death.

For example, if the property cost you $100,00 and you transfer it when the FMV is $500,000 the child's basis is still $100,000. Let us say the value at time of death is $1,000,000. And the child sells it for $1,100,000. If you had given it as a gift the taxable amount for the child is $1,000,000 but if the transfer was on death then the child is only liable for taxes on $100,000 of the saled.

I'm sorry, but you totally lost me on that one.. LOL.. Obviously this would be something to discuss with the attorney, but had this been the case (and no way around it), it would have been impossible (for financial reasons) for my neighbor and her son to have done this.. I believe my neighbor across the street did this 6 months ago as well, but I can't talk to him right now becuase he's in Ireland with his 2 granddaughters.. He's been a realtor for 40 years and would not have done this with his son if it were to trigger that kind of liability..

Either way, I will be sure to talk it over with the attorney and ask about any responses that I have received here - such as yours.. Thanks for bringing that up..

Believe me, I'm far too skiddish to jump into something of this magnitude without making sure that all of the bases have been covered..

 

[hercamore]

In Minnesota there is a new law allowing TODD which is transfer of deed upon death. This allows your heirs to avoid probate on your estate and saves some considerable legal fees.

Maybe it's legal in new York as well.

 

[barkley]

the other issue to consider is regarding medicaid.

if (god forbid) something occured that necessitated your applying for medicaid, depending on your state's rules-there could be a "look back" provision of several years. depending on how many months per year you live in your lake property you might qualify for it to be totaly exempted from consideration as an assett so long as you (or "you" by virtue of a p.o.a. or a legal document you can have a lawyer prep for you) state that it is your intent to retain that home and return to it folling any hospital/short term/long term hospital admission.

if the property is transferred in whole or part to another person then the entire value of the property could be used to create a period of ineligibility for medicaid lasting months and years.


as far as p.o.a.'s go-you have to realy get educated on these and idealy work with an elder law attorney to get one set up that's best for you/your situation. there are revocable and non revocable, there are ones that only kick in if you are deemed incapable of handling your own affairs (and those are hellishly difficult to invoke even if a person is incapable but has periods of lucidity during which they believe/are argumentative about the named party handling their affairs).

you also need to get an elder law attorney that is up to date on the laws pertaining to the state you live in vs. any state you may have bank accounts in (not sure if your lake house is in your home state and you might have accounts local to it). different states-different real estate, medicaid, banking, poa, estate laws.


we dealt with allot of these issue with my late mil, and honestly, despite what she thought was good legal advise (NOT), and a poa in place (which we could'nt realy use because during her time of lucidity she was adamant she di not want it invoked, and since it was revokable she could have pulled the plug on it in a heartbeat during those brief periods), the only "good thing" she did set up was taking her "emergency fund" (the 3 months of expenses financial advisors say to have set aside) bank account, and have dh listed as co-owner so that when we HAD to access funds for her we could, and when she passed there were immediate funds that could be utilized to meet her final needs and expenses.

 

[marymouse]

Maybe this makes the tax basis a little easier to understand.

You bought the property for $50,000 in 1980. If your child inherits the property from you the govt will consider the house to be worth $50.000.

If you deed the property to her or add her to the deed before your death then when you die the govt will considered the house to be worth fair market value. Which could easilty be $200,000.

The tax values change dramatically.

I can't answer to the gift tax but I know Dave Ramsey says NEVER put an adult child on a deed for the tax reasons alone.

 

[barkley]

Maybe this makes the tax basis a little easier to understand.

You bought the property for $50,000 in 1980. If your child inherits the property from you the govt will consider the house to be worth $50.000.

If you deed the property to her or add her to the deed before your death then when you die the govt will considered the house to be worth fair market value. Which could easilty be $200,000.

The tax values change dramatically.

I can't answer to the gift tax but I know Dave Ramsey says NEVER put an adult child on a deed for the tax reasons alone.

i'm not sure if dave ramsey talks about it, but 4 other reasons that can be compelling for not adding an adult child to a deed are-

(1) in some states it triggers a re-assessment for property tax purposes which can result in a higher yearly bill,

(2) if the property gets subsequently sold, you can end up with a higher capital gains tax because it's likely the other owner won't qualify for the exclusion on their ownership interest in the sale,

(3) when you add someone to a deed it makes that property subject to judgements that could subsequently occur with them. so if for example-a person got into an auto accident and the judgement exceeded their auto insurance coverage, the home on which they are listed as an owner can be gone after to force a sale,


and,

(4) unless you do the deed up correctly (joint tenants with the right of survivorship vs. tenants in common), should something happen to the adult child, their percentage of ownership will become part of their estate which can create a huge hassle depending on how their estate planning is set up (dealing with whomever inherits their share of your home, requiring costly probate where it would not have been required otherwise...).



at bare minimum, if a person is going to list an adult child on their deed they should explore/consider getting that adult child to do a limited durable power of attorney to THEM for just the purposes of dealing with that property. in the event their adult child becomes incapable of handling their own affairs (as in the adult child's own affairs), without a poa that parent is going to have to deal regarding their home with whomever ends up being their adult child's legal rep. (and as i posted earlier about medicaid considerations with the primary owner if they gifted the home to their adult child, in the event of a catestrophic illness or injury if that adult child is listed as an owner of the property it might create ineligibility for them/their minor children for needed public services).

 

[Darcy03231]

Okay.. A little update here.. I talked to a friend up here who recently did something that I'm considering doing now (through a lawyer) and it seems that might be the best way to go.. His fee actually wasn't that much for the changes to the deed (well - in her case 2 deeds to 2 different properties) - the filing fee with the county was actually higher..

Her DH passed away last year - and they only had one child.. So what she did was to sign over her house and her seasonal place to her son - with a "lifetime tenancy" clause on both for herself...

I would like to do the same with my place here at the lake (the only real estate property that I own now) and while I'm at the lawyers office anyhow, get a POA in place in case it's needed in the future.. (Like I'm critically ill and someone has to be able to sign checks and have access to my bank accounts to pay my bills and such..)

I won't do anything - without consulting a lawyer.. After thinking on it overnight, I decided I'm a little too skiddish (and a little too "OCD-ish") to take that chance..

Does this sound more reasonable than just "adding" names to the deed?

Thanks for the responses..

You might want to speak with your attorney about putting the property in a trust with yourself as the Grantor and Trustee and primary beneficiary and your heirs as the secondary beneficiaries (you'll also have to name a Successor Trustee in the event of your death).

This is what our attorney suggested (and we did) for estate planning purposes. Because an entity now owns the property it doesn't pass through probate when you die.

We ended up putting almost everything we own in the trust. Both of us are co-trustees. When one of us dies the other will be sole trustee and then when we're both dead DS#1 and DD#2 becomes the Co-Trustees. There are lots of specific provisions within the trust once that happens. Cost wise, it ran us about $1000, which included changing 2 deeds and all the associated filing fees, the trust itself, 2 wills, 2 living wills, 2 powers of attorney and 2 health care powers of attorney. I consider it money well spent.

 

[golfgal]

To make it easier to under stand, you bought the property for $50,000, it is now worth $600,000. If it passes to your DD after you die, it would be like she paid $600,000 (step up in basis it is called) vs the $50,000 you paid for it. If they go to sell it when you die, they pay taxes on THEIR gain, so if they sold it for $600,000, no taxes. If you put them on the deed now and they go to sell it after you die, they pay taxes on the $550,000 gain.

Get a POA, a medical directive, etc., add your DD to your checking accounts/bank accounts and have a will and a trust drawn up. THAT will be MUCH better then just adding them to a deed or doing what your neighbor did. Just because your neighbor is a real estate agent doesn't mean they understand tax laws and they just penalized their kids with a HUGE tax bill.

 

[manning]

I'm sorry, but you totally lost me on that one.. LOL.. Obviously this would be something to discuss with the attorney, but had this been the case (and no way around it), it would have been impossible (for financial reasons) for my neighbor and her son to have done this.. I believe my neighbor across the street did this 6 months ago as well, but I can't talk to him right now becuase he's in Ireland with his 2 granddaughters.. He's been a realtor for 40 years and would not have done this with his son if it were to trigger that kind of liability..

Either way, I will be sure to talk it over with the attorney and ask about any responses that I have received here - such as yours.. Thanks for bringing that up..

Believe me, I'm far too skiddish to jump into something of this magnitude without making sure that all of the bases have been covered..

In other words you deed it over to your child and paid $100,000 for it. Then they sell it for $1,000,000.00 they will have to pay taxes on $900,000. ($1,000,000 minus $100,000 (your cost basis).

If they inherit the property when you die then a new cost basis is used. That would be the value of your house on the day of your death. This now becomes your child's cost basis. Let's say it will be $600,000. They sell it for $1,000,000. They will pay taxes on $400,000. $1,000,000 minus $600,000 (their new cost basis) .

What you have done is save them a ton of money in taxes.