Home ownership with S/O

[robls]

Hey Everyone,
Little help on home ownership with S/O.
Some details.
My partner owns his home free and clear. He is 61.
His gross is about 58K.
I am 51. My name is not on the title.
My gross is about 29K.
We are both looking to retire sometime in 2010(mid-year?)
What is the best way to have both of our names on the title?
Attorney? Not sure about it.
Thanks for any advice in advance.
Rob

 

[Texas Proud]

Have him change the title to include both of you... nothing else will get you there...

Not to be contoversial... but why not get married? This would give you a right to live there even if he does not leave you the house when he dies... and also give you some rights to other assets etc.

PS... are kids out there somewhere? This can cause problems also...

 

[robls]

Have him change the title to include both of you... nothing else will get you there...

Not to be contoversial... but why not get married? This would give you a right to live there even if he does not leave you the house when he dies... and also give you some rights to other assets etc.

PS... are kids out there somewhere? This can cause problems also...

PA does not recoginize same sex marriages. No kids involved.

 

[Rich_by_the_Bay]

What is your goal in putting both names on the title? There might be other options, depending on what you hope to accomplish.

 

[prubin]

[snip]
What is the best way to have both of our names on the title?
[snip]

In what state do you live? I just moved from CA (community property state) to NC and the titling instructions differ. I would consult with an attorney. If you were implying that you did and s/he could not answer the question to your satisfaction find another attorney.

 

[robls]

What is your goal in putting both names on the title? There might be other options, depending on what you hope to accomplish.

Live in Pennsylvania. No same sex marriage. Worried about death of partner. What other options are there? Feel free to pass along any ideas. Thanks.
Rob

 

[robls]

In what state do you live? I just moved from CA (community property state) to NC and the titling instructions differ. I would consult with an attorney. If you were implying that you did and s/he could not answer the question to your satisfaction find another attorney.

Live in Pennsylvania. No same sex marriage.
We met with an attorney already, and it seems expensive. Don't have the exact number in front of me, but it was over a grand.

 

[IndependentlyPoor]

I hope there is a tax lawyer out there who will weigh in on this. It seems to me that the implications are both subtle and profound. The tax laws can be a minefield for unmarried couples living together. You can unwittingly get yourself into all sorts of trouble with separate and combined finances and assets.

If you don't pay fair market value for your share of the house the IRS might consider it a gift and levy gift taxes. Once your name is on the deed, you should probably also pay your share of the real estate tax. Your taxing jurisdiction probably can't report multiple social security numbers to the IRS for taxes paid on a single property, so you will have to use the ex nominee mechanism to split up the taxes paid when you file your income tax (if you itemize).

You might also opt for just one of you to claim 100% of the taxes paid. That is what we did, and I never knew if it was completely legal or not, but it saved us a lot of money because my income was significantly more than that of my S.O.

When you sell your house, there will also be the question of how to divide the capital gains (if any). We bought our last house together, with both of our names on the title and mortgage. When we sold it, the closing agent just asked us how we wanted the gains reported. We didn't have a clue as to the implications. We finally opted to assign all the gains to me to be consistent with the way we had been handling the real estate taxes.

Then we deposited all that money in our joint investment account. Oops. Didn't think far enough ahead. There went our consistency. It turns out that with the homestead exclusion for taxes, we didn't owe any federal tax on the capital gains, but...

Our C.P.A. says that one is not obligated to pay the maximum possible tax, and it seems that there is some grey area and leeway as to how an unmarried couple with yours-mine-and-ours finances handles taxes on investment returns. I hope he is right. We have always tried to do the proper and fair thing, but the fact that the government does not recognize gay couples makes it almost impossible in come cases. Brokerages and banks report income on joint accounts under a single SS number: ex nominee again, but what split: 50/50, percentage of income, or whatever results in the least taxes? Are you obligated to remain consistent with your allocations?

If we had it to do all over again, I would keep our finances completely separate to eliminate potential income tax problems, but we have had completely intermingled finances (joint accounts for everything except IRAs and 401(k)s) for 20 years and I credit that for the fact that we have never had any disagreement over money or finances. Everything just goes into one pot and that's that.

Sorry to be so long winded on a topic that probably does not interest most of the folks here.

 

[freebird5825]

I am a single lady who is the sole owner of my house. My fiance (dh2b) lives here and we cost share on everything.

Technically, while we are unmarried, if "something happens to me", dh2b would have zero right to reside here and my relatives could displace him legally.
So.....I have a revocable living trust which, upon my death, would create a family trust, under which dh2b is guaranteed lifetime living rights in my house, under certain well thought out conditions regarding our relationship at TOD and certain potential actions of parties from his past life. My estate would cover basic household bills while he resides here. He does not inherit, so no tax implications or gold-digger issues for him.
If he vacates the house or passes, the house then goes to other named beneficiaries (charity).

Nolo has an excellent book entitled "Living Together - a Guide for Unmarried Couples", ISBN -13: 978-1-4133-0423-7. Mine is dated 2006. Call 800-728-3555 to get the most recent version or see your local library.

 

[IndependentlyPoor]

Great points freebird. An attorney once advised us to put everything into a trust with both of us as trustees. Apparently that makes everything better in case of death. It was expensive and sounded like a lot of trouble, so we didn't do it, but that is probably the safest way to go.

 

[Sarah in SC]

Independently Poor and Freebird both gave excellent advice. It is very important that your estate planning be done with an attorney who understands the inherent estate problems you face.
I agree that you need to address the title, but be very sure you've also named each other durable health care proxy with your state's form and recorded your wills on videotape if there is any expectation that a family member may contest. Sad stories out there, as I'm sure you know.

I would be very wary of the gift tax problems that Ind Poor referenced.

 

[Texas Proud]

PA does not recoginize same sex marriages. No kids involved.

Opps... put foot in mouth...

 

[freebird5825]

Great points freebird. An attorney once advised us to put everything into a trust with both of us as trustees. Apparently that makes everything better in case of death. It was expensive and sounded like a lot of trouble, so we didn't do it, but that is probably the safest way to go.

I am the sole Trustee while I'm still respirating.
My total cost for the revocable trust, transferring the house into it, and all associated documents (estate plan, pour over will, HCP, final arrangements instructions, successor trustee and trust protector, greedy relative blocking clauses , etc) was $3000 in 2007. It is highly customized to my life situation. I was 49 when it was written.
It was expensive, but I never have to mess with it again, even if dh2b voluntarily exits my life. Divide that cost over 20-30 years
(do I hear 40 years?) when it actually might kick in, and I have a bargain.
Peace of mind and taking care of dh2b, to me, has no price tag.
We plan to marry in 2013, and the trust is written so it applies whether we are married or not. The beauty of a trust is you can write in strict conditions, not the case with only a will. [I am quoting my estate attorney a lot here.]

 

[IndependentlyPoor]

A trust that comprises everything including investment accounts might also simplify (or at least clarify) the income tax problem, but I don't know. It might also make it worse.

Just think of how cool a trust fund is, you could become a trust fund baby at the ripe of age of 50-something! You might have to affect a Katherine Hepburn accent.

One good thing about having joint accounts is that they have rights of survivorship clauses. Such accounts transfer automatically, apart from the will. Likewise, IRAs and 401(k)s allow designation of beneficiaries.

 

[Rich_by_the_Bay]

Live in Pennsylvania. No same sex marriage. Worried about death of partner. What other options are there? Feel free to pass along any ideas. Thanks.

I claim no legal expertise, but why can't the inheritance concern be taken care of with appropriate estate planning and a good will? Don't forget that if you're on the deed you not only get part ownership, but you also acquire any future debts - cuts both ways.

I'd see an estate planning lawyer; still not sure whether there's any good reason for you to get on the deed.

 

[robls]

Thanks, everyone for the great replies.
Here is some more information on my situation.
We had wills made up 5+ years ago naming each other as beneficiaries.
Medical POA at the same time.
Our 401k and IRAs have each other listed as beneficiares.
Life insurance policies have each other listed as beneficiares.
Neither of us has any debt, except for the monthly credit card bill. Each of us has our own credit card. Low amounts on each($200 bucks?) Pay off monthly.
Health insurance through the company we work at. Have to pay towards the premium. Have researched and budgeted for it in the future.
Any more ideas or thoughts, you can throw my way.
Thanks again.
Rob

 

[IndependentlyPoor]

We are having new wills drawn up right now, and I believe the lawyer is also drawing up a pair of Durable Power of Attorney documents. These make it possible for one partner to conduct the financial affairs of the other in case one is incapacitated. Some investment companies insist that you use their own forms.

I suspect the laws vary a lot from state to state, but in Texas, this is separate from the Durable Power of Attorney for Health Care, a.k.a., living will. Some states have statutory forms for one or both of these.

 

[robls]

We are having new wills drawn up right now, and I believe the lawyer is also drawing up a pair of Durable Power of Attorney documents. These make it possible for one partner to conduct the financial affairs of the other in case one is incapacitated. Some investment companies insist that you use their own forms.

I suspect the laws vary a lot from state to state, but in Texas, this is separate from the Durable Power of Attorney for Health Care, a.k.a., living will. Some states have statutory forms for one or both of these.

Yes, have the Durable Power of Attorney also.

 

[freebird5825]

The only further [-]cynical[/-] advice I can throw your way is to consider "next-of-kin" rights and the lack thereof of life partners/SO unless specifically designated.
Remember there are living parents and siblings to consider. All it takes is one bad apple to throw a monkey wrench in the w*rks after the fact. BTDT x 2 estates. People can and will get funny about the simplest things.
Are your documents current versions (not outdated and therefore invalid) and specific for the state of residence?
Are they signed, witnessed, and notarized as required (document dependent) ? Do each of you have originals and is there a trusted 3rd party also with an original as backup ? Copies don't hold water anywhere.
If there are no other issues, looks like you have it covered. I would recommend a legal review by a reputable estate attorney, just to be sure.

 

[robls]

The only further [-]cynical[/-] advice I can throw your way is to consider "next-of-kin" rights and the lack thereof of life partners/SO unless specifically designated.
Remember there are living parents and siblings to consider. All it takes is one bad apple to throw a monkey wrench in the w*rks after the fact. BTDT x 2 estates. People can and will get funny about the simplest things.
Are your documents current versions (not outdated and therefore invalid) and specific for the state of residence?
Are they signed, witnessed, and notarized as required (document dependent) ? Do each of you have originals and is there a trusted 3rd party also with an original as backup ? Copies don't hold water anywhere.
If there are no other issues, looks like you have it covered. I would recommend a legal review by a reputable estate attorney, just to be sure.

1) Signed, witnessed, and notarized.
2) Each us have our originals, attorney has copy and independent person has a copy.
3) Know all about family. I have fallen out from mine, after my mother's death. Have kept them in the dark in regards to my affairs, and have tried to bulletproof them as much as possible.

 

[Sarah in SC]

Sounds like you have done your homework, Robls.
Is there any other property of any significance besides the house?

 

[robls]

Sounds like you have done your homework, Robls.
Is there any other property of any significance besides the house?

Thanks, for the complement, and call me, Rob.
Only 1 property between the 2 of us. Been living there since 1980.
Now that you mention a sigificant piece of property, it completely slipped our minds about his 1971 Corvette. Have to look at his will, and see if that is mentioned in there. If not, have to have the will amended.
Thanks.
Rob

 

[Sarah in SC]

Oooh, nice car!
So what is the purpose of adding you to the title now? Is it not defined in the other documents? What has been the reason not to add you in all these years you've lived there? And if it is personal, I understand, but I'm asking if there was a financial or business reason for it. Liability perhaps with a business or something?

 

[robls]

Oooh, nice car!
So what is the purpose of adding you to the title now? Is it not defined in the other documents? What has been the reason not to add you in all these years you've lived there? And if it is personal, I understand, but I'm asking if there was a financial or business reason for it. Liability perhaps with a business or something?

After all the finanicial planning, research, saving, just plain living life, we never discussed putting the house in both of our names. Without going out and doing the research myself, I was looking for some feedback on putting the house in both of our names. Was just looking for the pros and cons, and the best way to go about it, if that is what we decide to do.

 

[Sarah in SC]

Fair enough. So, then I'd go the route suggested by IndepPoor and check the gift tax consequences before adding you to the title.

That is probably something that your CPA can advise you on. You might run it past the estate person who prepared all your other documents, as he/she probably has a pretty good handle on your plan.

The mechanics of adding you to the deed/title is probably very straightforward, just a joint tenants ownership if there aren't any tax consequences to consider.