How Can My Mother Transfer Her House to Me?
Full Question:
Answer:
A deed transfer is a relatively uncomplicated procedure that may be accomplished without an attorney using our forms online, which are tailored to each state's laws. The mothe will need to have the mental capacity to understand the nature and consequences of the act in order to sign the deed. The answer depends on all the facts involved, such as value of assets, tax implications, reason for wanting the transfer, etc. For example, if the transfer is made in anticipation of entering a nursing home, any assets transferred within the past five years are included as assets for Medicaid purposes. Transferring a house to the following people does not affect eligibility for Medicaid:
-A spouse
-A child under the age of twenty-one or a child who is certified blind or certified disabled at any age
-A sibling with an equity interest in the home who has resided in the home at least one year immediately prior to the date the patient became institutionalized and continues to lawfully reside in the home
-A caretaker child who has resided in the home for at least two years immediately prior to the date the patient became institutionalized and who provided care.
If a person's equity interest in the home is $500,000 or less (or $750,000 or less in some cases) and the person intends on returning home, it will not be considered as a resource in determining eligibility for Medicaid. The equity value is derived by subtracting encumbrances such as liens and mortgages from the fair market value. Reverse mortgages and home equity loans can be used to reduce the equity interest.
Creating a life estate without the power to sell the house is a disposal of a resource that may disqualify you from Medical Assistance. If a life estate deed without the power to sell was created long enough ago that there is no penalty, the house is a countable resource, but your life estate without the power to sell has a market value of $0, so it would not disqualify you from Medical Assistance. The purchase of a life estate will be included in the definition of "assets" unless the purchaser resides in the home for at least one year after the date of purchase.
Creating a life estate deed with the power to sell the house is not a disposal, because you still have the power to sell the house at any time without anyone else's permission. However, the house could not be an exempt resource based only on your saying you intend to return home, because the State cannot put a lien on a house owned this way. The market value of the house would be counted as an available resource. If the house would be exempt for other reasons, such as because your spouse or a dependent relative lives in it, then it still would be exempt.
Joint tenancy is a form of ownership by two or more individuals together. It differs from other types of co-ownership in that the surviving joint tenant immediately becomes the owner of the whole property upon the death of the other joint tenant. State law, which varies by state, controls the creation of a joint tenancy in both real and personal property. Joint tenancy property passes outside of probate, however, it may be severed so that the property becomes part of one person's estate and passes to that person's heirs. A joint tenancy between a husband and wife is sometimes known as a tenancy by the entirety. Tenancy by the entirety has some characteristics different than other joint tenancies, such as the inability of one joint tenant to sever the ownership and differences in tax treatment. In some jurisdictions, to create a tenancy by the entirety the parties must specify in the deed that the property is being conveyed to the couple "as tenants by the entirety," while in others, a conveyance to a married couple is presumed to create a tenancy by the entirety unless the deed specifies otherwise. Each joint tenant has an equal, undivided interest in the whole property. All joint tenants, and their spouses, must sign deeds and contracts to transfer or sell real estate. A joint tenant may convey his or her interest to a third party, depending on applicable state law. This conversion would in effect terminate the joint tenancy and create a tenancy in common.
Joint tenancy comes into being, or is created, by a specific act of the parties involved. For example, real estate held in this fashion is typically the result of a property transfer by deed. Each joint tenant owns an equal share of co-owned property. When the first joint-tenant dies, the title designation transfers the property immediately and automatically to the surviving joint tenant. This ownership arrangement is said to be a will substitute because it eliminates probate of this particular asset. Avoiding probate does not mean the property will not be included in the taxable estate of the first co-owner to die, or that state and a federal gift and estate taxes will be avoided. Estate planning experts feel joint tenancy is a poor method of planning property transfer for two reasons. First, each co-owner has given up the right to leave the property to anyone other than the other co-owner. Circumstances may change and either tenant may later want to leave the asset to someone else. Either party can usually dissolve a joint tenancy during life, but this may not always be possible or practical. Second, where taxes are an important consideration in planning an estate, holding assets in joint tenancy does not permit one joint tenant to leave their share of the assets in such a way as to save taxes. Upon the death of the first joint tenant, the asset goes outright to the survivor. This causes the survivor’s taxable income and taxable estate to be increased. Careful consideration should be given to the tax consequences of dissolving existing joint tenancies because additional gift and estate tax obligations may be created. Tax implications should be fully explored with tax experts before changes are made and, particularly, before new joint tenancies are created. Joint tenancy with the right of survivorship reflects the desire of many husbands and wives to hold title to property in a way that the survivorship characteristic prevails. When either dies, they each want the surviving spouse to acquire full ownership in the property and to do so with a minimum of time, trouble, and red tape. Thus, they take or hold title to property as “Joint Tenants and to the Survivor.”
Tenants in common hold title to real or personal property so that each has an "undivided interest" in the property and all have an equal right to use the property. Tenants in common each own a portion of the property, which may be unequal, but have the right to possess the entire property. There is no "right of survivorship" if one of the tenants in common dies, and each interest may be separately sold, mortgaged or willed to another. A tenancy in common interest is distinguished from a joint tenancy interest, which passes automatically to the survivor. Upon the death of a tenant in common there must be a court supervised administration of the estate of the deceased to transfer the interest in the tenancy in common.
Tenancy in common is another form of co-ownership of property that can exist between any two or more persons. Tenancy in common can be created by deed, will, or by law. Tenants in common, like joint tenants, must act together to decide how they are going to enjoy and use the property. Problems about the management and improvement of the property, and how the income stream is to be divided, can exist. A distinguishing characteristic is that there is no right of survivorship. Each tenant can dispose of their separate and distinct, yet undesignated, interest in the property in any way they choose.
Each co-owner can sell it or give it away. They can direct its eventual disposition by last will and testament, or they can ignore the problem. Each co-owner’s property will be distributed, when they die, according to the law of property descent and distribution. Several of the more important characteristics of a tenancy in common are:
1. Each tenant in common has the power to dispose of their separate and distinct, yet undesignated interest, in whatever property is involved, any way they choose.
2. When a co-owner dies, their interest does not pass to the surviving tenant-in-common. It passes to the surviving co-owner spouse, or to some other person or party, but only if the property owner so indicates his wishes in his last will and testament. Otherwise, the property passes under the laws of intestacy.
In the case of a life tenant who holds a life estate, when the life tenant dies, their interest may pass to the remaindermen. Title may also return to the person giving or deeding the property or to his/her surviving children or descendants upon the death of the life tenant--this is called "reversion."
