Warranty Deed vs Will question

[Tailgate]

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?

 

[aja8888]

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.

 

[Tailgate]

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!!!

 

[aja8888]

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

 

[Ronstar]

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.

 

[pb4uski]

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?

 

[haha]

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

 

[rodi]

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.

 

[aja8888]

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.

 

[pb4uski]

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.

 

[haha]

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

 

[Sue J]

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.

 

[pb4uski]

Wouldn't you lose basis step-up with this process? ....
Ha

Yes, I think they would. ....

Looks like I was wrong.

See http://www.americanbar.org/content/...agazine_2007_ja_KirtlandSeal.authcheckdam.pdf

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

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.