Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Warranty Deed vs Will question
Old 01-15-2014, 09:49 AM   #1
Full time employment: Posting here.
Tailgate's Avatar
 
Join Date: Jul 2013
Location: Texas
Posts: 880
Warranty Deed vs Will question

Mom's 84, great health, no issues... just planning for 'what if's'.. very small net worth, mostly older house worth about 40k. I want to split equally with niece and nephew (only family left). Attorney recommended Warranty Deed instead of a will. This supposedly specifically passes the home to us equally and is simply recorded at the courthouse vs probating a will.
Anyone have an experience or knowledge of such an instrument?
__________________

__________________
Tailgate is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-15-2014, 10:05 AM   #2
Moderator Emeritus
aja8888's Avatar
 
Join Date: Apr 2011
Location: The Woodlands, TX
Posts: 7,141
The new warranty deed should specify the transfer of ownership to the three parties equally (grantor to grantees). Record the deed at the county clerk's office after all is signed by your Mom and the three of you and notarized.

A local title company attorney can prepare it for you. Shouldn't cost more than a few hundred dollars to prepare and record. Since you three will OWN the property, you will be sent tax bills.

We did similar with a family member a few years ago. Pretty simple here in Texas. You don't need a will to pass this asset, unless you want to go through the probate process.
__________________

__________________
aja8888 is offline   Reply With Quote
Old 01-15-2014, 10:07 AM   #3
Full time employment: Posting here.
Tailgate's Avatar
 
Join Date: Jul 2013
Location: Texas
Posts: 880
Quote:
Originally Posted by aja8888 View Post
The new warranty deed should specify the transfer of ownership to the three parties equally (grantor to grantees). Record the deed at the county clerk's office after all is signed by your Mom and the three of you and notarized.

A local title company attorney can prepare it for you. Shouldn't cost more than a few hundred dollars to prepare and record. Since you three will OWN the property, you will be sent tax bills.

We did similar with a family member a few years ago. Pretty simple here in Texas. You don't need a will to pass this asset, unless you want to go through the probate process.
excellent.. sounds like that will work.. thank you!!!
__________________
Tailgate is offline   Reply With Quote
Old 01-15-2014, 10:16 AM   #4
Moderator Emeritus
aja8888's Avatar
 
Join Date: Apr 2011
Location: The Woodlands, TX
Posts: 7,141
Tailgate:

Besides the real estate, don't forget to see if Mom will allow adding payable upon death provisions in her bank account(s). Without that, or having joint accounts, getting the banks to release any deposited funds will be difficult.

Texas also has what's known as a "small estate affidavit" for situations where things are not in place at the time of death, which in your case, may not be realistic. Anyway, here is a summary:

Texas Estate Planning and Probate Law: Alternatives to Probate Administration for Small Estates in Texas
__________________
aja8888 is offline   Reply With Quote
Old 01-15-2014, 12:39 PM   #5
Moderator
Ronstar's Avatar
 
Join Date: Aug 2007
Location: A little ways southwest of Chicago
Posts: 9,337
In addition to the warranty deed, I would get a title policy. This will let you know if any claims have been made against the property. Probably not, but its best that the new owners have title insurance. Also, you may want to change the real estate tax payor from your mom to you, your niece & nephew. Generally, a warranty deed will not spell out that the 3 of you will each own a third. You may want to ask your attorney if 3 deeds - one to each of you for 1/3 undivided interest may be a better idea.
__________________
Ronstar is offline   Reply With Quote
Old 01-15-2014, 02:53 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,406
Mom realizes that she is giving up control of her house by signing this - right? May be fine but as much as my Mom trusts us I doubt she would do it.

Why not have the three of you own it jointly with Mom retaining a life estate so the three of you own it when Mom passes or forfeits her rights to use the property? Or something along those lines.

Are niece/nephew adults?
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 01-15-2014, 03:25 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Quote:
Originally Posted by aja8888 View Post
The new warranty deed should specify the transfer of ownership to the three parties equally (grantor to grantees). Record the deed at the county clerk's office after all is signed by your Mom and the three of you and notarized.

A local title company attorney can prepare it for you. Shouldn't cost more than a few hundred dollars to prepare and record. Since you three will OWN the property, you will be sent tax bills.

We did similar with a family member a few years ago. Pretty simple here in Texas. You don't need a will to pass this asset, unless you want to go through the probate process.
Wouldn't you lose basis step-up with this process? And what will the three new owners do with it?

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 01-15-2014, 03:33 PM   #8
Moderator
rodi's Avatar
 
Join Date: Apr 2012
Location: San Diego
Posts: 8,802
Quote:
Originally Posted by haha View Post
Wouldn't you lose basis step-up with this process? And what will the three new owners do with it?

Ha
That was my question. If it's jointly owned what if there is dispute on whether to sell it, to rent it, to live in it....

I've seen families get in big fights over fairly inexpensive real estate willed to them.
__________________
rodi is offline   Reply With Quote
Old 01-15-2014, 03:37 PM   #9
Moderator Emeritus
aja8888's Avatar
 
Join Date: Apr 2011
Location: The Woodlands, TX
Posts: 7,141
Quote:
Originally Posted by haha View Post
Wouldn't you lose basis step-up with this process? And what will the three new owners do with it?

Ha
Good question. I was giving them the suggestions on how to change the deed as we have been there in Texas a few years ago.

They should investigate the tax consequences and any issues with the potential other owners.
__________________
aja8888 is offline   Reply With Quote
Old 01-15-2014, 04:06 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,406
Quote:
Originally Posted by haha View Post
Wouldn't you lose basis step-up with this process? And what will the three new owners do with it?

Ha
Yes, I think they would. However, if the three owners are in the 15% tax bracket and 0% capital gains rate then since the asset is worth ~$14k each ($40k/3 owners) it might not make a difference.

IOW, if the donor's basis is $5k then each of the three owner's gain would only be ~$12k each.

I wonder if any/all of the new owners might make it their residence for a time after Mom passes so the principal residence exclusion might also come into play.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 01-15-2014, 04:09 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
I must have missed the house value. Still, not many single working people are in the 15% bracket. I guess it would depend on the particulars of the situation

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Warranty Deed vs Will question
Old 01-15-2014, 04:38 PM   #12
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Posts: 2,423
Warranty Deed vs Will question

In Ohio we filed an affidavit (Dad signed and it was notorized) for Transfer on Death that specified that Dad's property would transfer to my sister and I upon his death. This would have kept it out of the will and probate. No lawyer was needed, there was a small filing fee at the county property dept.
__________________
Married, both 62. DH retired June, 2010. I have a pleasant little part time job.
Sue J is offline   Reply With Quote
Old 01-15-2014, 04:52 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,406
Quote:
Originally Posted by haha View Post
Wouldn't you lose basis step-up with this process? ....
Ha
Quote:
Originally Posted by pb4uski View Post
Yes, I think they would. ....
Looks like I was wrong.

See http://www.americanbar.org/content/d...thcheckdam.pdf

See full paragraph in middle column of page 43. (I can't seem to copy/paste it).

Quote:
Contrast this result with what occurs under a transfer-on-death deed, when the transfer is deemed to occur at the grantor’s death and the grantee receives a step-up in basis. 26 U.S.C. 1016.
__________________

__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 08:55 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.