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  1. #1
    Join Date
    Oct 2009
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    15

    Default Real Estate Tax Deduction, Insurance and Title Structure

    Jk or anyone who knows the answer to my questions,

    1)My mom has changed her mind and decided that she wants to remain a 1/5 owner on the property. She said it will make it easier as far as paying the taxes as she wants to keep her tax deduction and she is going to apply for the senior tax exemption as well. She said it would make paying the insurance easier as well as insurance companies like to know that the insured lives in the home.

    2)I think you said that the 4 kids could have a tenancy in common with each other and a joint tenancy with mom. Are you certain of this? I cannot find anywhere on the internet that this is an option.

    3)If it is not possible and we are all tenants in common (that is the way the lawyer was going to draw up the new deed) and my mom holds the 1/5 share, will that 1/5 be subject to probate. We certainly do not want to have to go through probate as everything becomes a public record, it is costly and can hold the house hostage for a very long time. Is there a way for my mom to keep her 1/5 share and avoid probate? I know a trust will avoid probate but I would like to know if she could word the will in such a way that the property automatically passes to the kids without having to go through probate and still have a tenancy in common.

    4)If the house must go through probate, will the cost for her 1/5 share be lower or about the same as the cost for the entire house to go through the process?

    5)We are also concerned about Medicaid taking that portion of the house and I don't believe a life estate for her versus owing 1/5 will solve the problem. In fact, I think the value of a life estate is higher than the value of her 1/5 share, something like 44%.

    6)Maybe we can do a tenancy in common with mom and have her only own 1% of the home rather then 1/5, that way Medicaid can only take 1% and she is still considered an owner and can pay the taxes and insurance. What do you think?

    Thanks again for you help!

  2. #2
    Join Date
    Oct 2009
    Posts
    15

    Default Real Estate Tax Deduction, Insurance and Title Structure

    I have posted in the "Ownership and Title" Forum in the life estate section about issues I am having with my mom's will/deed etc. I thought I would post this particular question here since it has to do with taxes.

    My mom is living in a home in Ct. and I am a joint owner WROS with her and 3 siblings. We are considering changing the joint tenancy to a tenants in common so the entire home is not exposed to creditors. She currently has a life estate reserved for her husband on the deed but is going to remove it due to his mental status.

    1)Since she lives in the home, she is paying the entire amount of the taxes and taking a deduction. I don't know if she is taking a deduction on the entire amount or just on her 1/5 share. Is she entitled to a deduction on the entire amount given her circumstances?

    2)It is better for the situation all around if she removes her name from the deed. A life estate for her is not a good option for reasons I will not go into right now so she is considering removing her name. If she does, I am assuming she can no longer take the deduction on her taxes even though she is still paying them. Is this correct?

    3)But she is 83 and feels it is less confusing if she keeps things the way they are now (her name on the deed and maybe not change the type of tenancy). That way she can take her deduction and does not have to deal with gifting money to her 4 kids in order for them to pay the taxes which are due twice a year. What can we do to keep payment of taxes simple for her?

    3)Right now she and her husband are on the insurance policy (homeowners and liability) with the 4 kids as additional insured. Can she continue to pay her insurance in this manner if she is not on the deed? The kids cannot add themselves to their own umbrella policies with that property being a secondary residence as our insurance companies are all different and my agent will not allow it. Is there an easy solution to insuring the home so she can pay the bills without too much confusion?

    Please help me if you can. It would be very much appreciated.

  3. #3
    Join Date
    Sep 2005
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    98,846

    Default Re: Real Estate Tax Deduction, Insurance and Title Structure

    What would be best is for mom to consult an estate planning lawyer and form a plan consistent with her goals.

  4. #4
    Join Date
    Jun 2009
    Location
    California
    Posts
    666

    Default Re: Real Estate Tax Deduction, Insurance and Title Structure

    My opinion is that a trust is the least complicated way to do what you are trying to do. The trust would own the property removing the conditions of fractional ownership from the deed. If you go this route, I'd recommend getting an attorney specializing in estate planning and avoid the "trust mills" that seem to be running around.

    I'm not disagreeing with Mr. Knowitalls advice. I had my edit screen open a little longer than I realized and didn't see his note until finishing mine.

  5. #5
    Join Date
    Oct 2009
    Posts
    15

    Default Re: Real Estate Tax Deduction, Insurance and Title Structure

    Quote Quoting Mr. Knowitall
    View Post
    What would be best is for mom to consult an estate planning lawyer and form a plan consistent with her goals.
    Thanks Mr. Knowitall,

    The problem is that the attorney has advised her that the best thing to do would be to take her name off the deed and let her kids pay the taxes and have her gift the money to the kids but she thinks it will be too confusing to do that and therefore is reluctant to remove her name from the deed.

    Quote Quoting Scott67
    View Post
    My opinion is that a trust is the least complicated way to do what you are trying to do. The trust would own the property removing the conditions of fractional ownership from the deed. If you go this route, I'd recommend getting an attorney specializing in estate planning and avoid the "trust mills" that seem to be running around.

    I'm not disagreeing with Mr. Knowitalls advice. I had my edit screen open a little longer than I realized and didn't see his note until finishing mine.
    Thanks Scott67,

    She has already established her five year look-back for Medicaid because she gifted her shares to her kids more than 5 year ago. If we gift our shares back to her and then put it in a revocable trust (she is not willing to do an irrevocable trust), she will lose that look-back.

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