Mom in Ass't Living now wants to sell her house

[RetireeRobert]

As to transfer of house from Mom to daughter, it just occurred to me that the mechanics do not have to be hard or complicated. Just go to a title/escrow company for their services to prepare a warranty deed and get it properly recorded with the county at minimal expense.

 

[CardsFan]

At this point I'd consider Mom gifting the house to all 3 daughters , filing a gift return and when is Mom is gone sister uses the cash to buy out other two sisters. It would be easier to continue as you are now if Mom can be OK with that.

I am not a fan of multiple siblings owning a home, with one residing there full time. Been there, done that. Did not end well (this was an inheritance).

 

[ivinsfan]

I am not a fan of multiple siblings owning a home, with one residing there full time. Been there, done that. Did not end well (this was an inheritance).

Well simply transferring the home to one sister isn't without risk either.

 

[CardsFan]

Well simply transferring the home to one sister isn't without risk either.

Agreed. I don't see a simple solution that results in an equitable split without revisiting wills and beneficiaries.

 

[Markola]

She's 108 and has 700K don't think claw back is much of a worry...

Yeah, I was concerned at first about the Medicaid 5-year look back period, due to the intermingled life of the sister and mother, should it come to that for her, but the need for Medicaid seems unlikely. Since that’s probably off the table, I’d just focus on keeping all the siblings amicable, and it sounds like they are.

 

[jpjr]

In the back of my mind, I though perhaps either a warranty or quitclaim deed followed by a notarized letter authored by an attorney that sister #1 is accepting ownership of home and relinquishing 2/3rd of the current value (120k) of the proceeds from the estate. Since the deed will have to be signed by Mom, she will be aware of the transfer and can also be part of the notarized letter......yes I know, if it is not in the will then ancilliary agreements have no standing, but given our trusting relationship it might be the easiest way to managing the change in ownership.

 

[RetiredAndLovingIt]

Good for her if she's still sharp enough to make her own decisions at 108 and hopefully you're all respectful enough to fulfill them as she wants.
What is her secret to long life?

 

[pb4uski]

In the back of my mind, I though perhaps either a warranty or quitclaim deed followed by a notarized letter authored by an attorney that sister #1 is accepting ownership of home and relinquishing 2/3rd of the current value (120k) of the proceeds from the estate. Since the deed will have to be signed by Mom, she will be aware of the transfer and can also be part of the notarized letter......yes I know, if it is not in the will then ancilliary agreements have no standing, but given our trusting relationship it might be the easiest way to managing the change in ownership.

Have mother transfer house to sister #1 and the other two sisters each get a $60k mortgage note with the home as collateral. Mortgages would require no principal or interest payments but is due in full within x days of mother's passing. The mortgage notes give sisters #2 and #3 surety that they will get their "fair share" assuming that house is worth $180k. Sister #1 can pay off other two sisters from her 1/3 share of the $520k of assets (or whatever is left).

If mother lives long so the remaining assets are insufficent for the sister #1 to pay the mortgage note, you can always either forgive the remainder or negotiate acceptable payment terms or sister #1 can refinance with a bank and pay you off.

If the other $520k of financial accounts have beneficiary designations of 1/3 each then you should be able to avoid probate entirely and have a quick path for the sister with the house to pay you off.

 

[Sunset]

Have mother transfer house to sister #1 and the other two sisters each get a $60k mortgage note with the home as collateral. Mortgages would require no principal or interest payments but is due in full within x days of mother's passing. The mortgage notes give sisters #2 and #3 surety that they will get their "fair share" assuming that house is worth $180k. Sister #1 can pay off other two sisters from her 1/3 share of the $520k of assets (or whatever is left).

If mother lives long so the remaining assets are insufficent for the sister #1 to pay the mortgage note, you can always either forgive the remainder or negotiate acceptable payment terms or sister #1 can refinance with a bank and pay you off.

If the other $520k of financial accounts have beneficiary designations of 1/3 each then you should be able to avoid probate entirely and have a quick path for the sister with the house to pay you off.

+1

Good plan, now that we know the mother is 108 !

 

[Scuba]

Sell the house on the open market and put it in Mom's account. It's her house.
Sister needs to move out.
Mom needs the money generated from the house and the 700K, so cannot simply give the house to the children

Mom could live another 10+ years , when she does die, then the leftover money can be divided.

100% agree

 

[Surewhitey]

What is the life expectancy of someone at 108 yo?
I would not be buying green bananas.

 

[CRLLS]

What about putting the house and other assets into a living trust of mom's? Once the trust is created(if not already), this is usually done via a quit claim deed, =low cost. The trust can then accept the money from your sister for her "rent" and the trust pay the taxes, upkeep etc. on the house. This leaves it equitable for the 3 of you for now. When Mom passes, the trust can specify the house goes to sister with a then current appraisal being considered part of her 1/3rd equal division.

 

[armor99]

From purely a tax perspective:

How long has Mom been living in Assisted Living as opposed to the house?

This will be a huge question in determining if she will qualify for the "exclusion" for sale of primary residence to the normal capital gain taxes that will be due.

If she has been in assisted living less than 3 years, see if you can get the house sold (or ownership transferred) ASAP. Otherwise a significant portion may go to Federal (and possibly State) capital gains taxes.

Otherwise it may make since to keep the house until after death to receive a stepped up basis in capital gains.

Note if she 'gifts' the house to someone before her death, the recipient will retain the original basis in the house -- a potentially less than optimal outcome.

You might want to get some professional advice on all this. I just tossed these issues out to motivate a discussion.


-gauss

Thanks for bringing up the topic of “stepped up basis”. This could be really significant considering the mom is 108, and how long she has owned the property? Just so people are aware.

If you transfer a property to someone else while you are alive, then when that person one day sells the house, they will have to pay capital gain tax…. all the way back to when mom originally bought the property. In some places in CA (because of the crazy real estate there over time) that could be capital gains tax on more than 1 million. Or…. If the mom wills you the property at death, you get a “stepped up basis”, and only pay capital gains on when you took ownership of the home and when you sell it. So if you sell it right away, no tax at all. This can be really significant..

 

[ivinsfan]

The house is worth 180k...but a good point and why I suggested they explain all this to Mom and see if she changes her mind.

 

[ChrisC]

From my vantage point, this is much ado about nothing, given the fact there's a POA and Will in place already for the 108 year old mom (and God bless her soul having gone through the Spanish Flu of 1918, the Depression, WWI and WWII, Pearl Harbor, the Korean War, Cuban Missle Crisis, the Civil Rights Movement,9-11, the Vietnam and Afghanistan Wars, etc.) She's living history and I hope her children and grandchildren take the opportunity to record her thoughts and experiences as she is still lucid. (We know a 103 year old gentlemen, still lucid and mobile, who was a Marine and served in the Guadalcanal Campaign during WWII, and he is always anxious to tell his story -- if you don't prompt him, he'll actually say to strangers "don't you know I'm living history.")

But back to why I believe this is much ado about nothing.

Our Centenarian wants to leave the house to one daughter, doesn't want the responsibility of owning the house anymore, and wants her assets and valuables to be divided equally among her children. The first isssue of leaving the house to one daughter is solved by simply amending her will to say that (and if she's in a state where probate is easy and real estate drops like a rock to a designated heir, probate accomplishes this in a very expeditious manner -- the will when filed operates as the transfer document. The second issue - the Cenenarian not wanting ownership responsibilty over the house is already solved by the POA currently in effect and the fact that the daughter in the house is maintaining the house and paying taxes and insurance. What else needs to be done there, except explaining that Mom is now out of the loop and children are taking care of the house.

The final issue, like the first one, needs to be resolved by amending the Will, making sure all assets (including insurance policies such as naming the estate as the beneficiary or if not doing that, then equitably adjusting beneficiary payments) go through probate, and equitably dividing the proceeds and assets, especially appropriate if funeral bills, medical expenses, and assisted living facility expenses have to be paid -- you really don't want to be scrambling around for this if all that's left (as currently mentioned by OP in the estate is the house) -- how are bills to be paid after death and how are refunds (such as tax refunds) to be handled!

Sometimes the idea of avoiding probate makes no sense, especially if you're not in California where probate I'm told can be a pain, even for small estates.

The OP needs to get competent counsel to work with the familiy on this and stop taking advice over the internet, including advice from me,

 

[jpjr]

ChrisC

The most important part of your analysis is the need for us to seek competent counsel. I have already reached out to two attorneys, one who originally set up all of the current documents as well as a firm that "specializes" in this type of work. I have used this forum as a sounding board on a few occasions in an effort to get a broader picture of possibilities rather than having any attorney provide a paste and cut version he/she always uses. I enjoy everyone's perspective and the ideas floated often lead to a final resolution.

Neither I nor Sister #2 want to be involved with the home, and Sister #1 is not necessarily the most reliable individual when it comes to finances. It has been Sister #1 constant requests for Mom to do improvements/repairs that finally has tried Mom's patience and to make the request to be divested of the house. Mom knows the house is the best place for Sister #1 (we agree) but what was supposed to be a symbiotic relationship has devolved into a dependent one.

Capital gains if we pass this on now and sold later should fall well within the limits where no taxes are due. The only thing going through probate will be the house at this juncture. All other assets, bank accounts, annuities, and life insurance policies already are POD.

Again, I really enjoy the responses/suggestions, and value everyone's input. We use them as a means to gain greater understanding of what we think we know, should know, and have to know when we look at our situation.

 

[CardsFan]

Neither I nor Sister #2 want to be involved with the home, and Sister #1 is not necessarily the most reliable individual when it comes to finances. It has been Sister #1 constant requests for Mom to do improvements/repairs that finally has tried Mom's patience and to make the request to be divested of the house.

Now this comment is a game changer. Maybe my earlier "leech" comment (which I edited for) was not so far off the mark after all.

If I get this right, sister #1 lives in the house, pays less than the going rate to rent, but wants mom to pay for improvements.

Your mom is a Saint to put up with this without telling her to go pound sand.

I think I would just ask mom what she wants to do, and do it. She (your mom) is the one that needs to be treated with kid gloves, not the sister. There could be tax consequences, and it might not be the "optimal solution" but who cares when you are 108yo? Do what ever she wants.

 

[jpjr]

+1

Yes, it takes awhile to dig through the underlying dynamics, and perhaps my failure to get this deep into those underlying factors is just a matter of my reluctance to admit it.

 

[ChrisC]

ChrisC

The most important part of your analysis is the need for us to seek competent counsel. I have already reached out to two attorneys, one who originally set up all of the current documents as well as a firm that "specializes" in this type of work. I have used this forum as a sounding board on a few occasions in an effort to get a broader picture of possibilities rather than having any attorney provide a paste and cut version he/she always uses. I enjoy everyone's perspective and the ideas floated often lead to a final resolution.

Neither I nor Sister #2 want to be involved with the home, and Sister #1 is not necessarily the most reliable individual when it comes to finances. It has been Sister #1 constant requests for Mom to do improvements/repairs that finally has tried Mom's patience and to make the request to be divested of the house. Mom knows the house is the best place for Sister #1 (we agree) but what was supposed to be a symbiotic relationship has devolved into a dependent one.

Capital gains if we pass this on now and sold later should fall well within the limits where no taxes are due. The only thing going through probate will be the house at this juncture. All other assets, bank accounts, annuities, and life insurance policies already are POD.

Again, I really enjoy the responses/suggestions, and value everyone's input. We use them as a means to gain greater understanding of what we think we know, should know, and have to know when we look at our situation.

Well, in my humble opinion, and recognizing some of the family dynamics over managing the house, I still think you need to move very quickly to amend the Will to bequeath the house to Sister #1. I understood from what you posted that your Mother's wishes were to have Sister #1 -- notwithstanding all the aggravation your family has endured over Sister #1 stewardship of the house -- stay in the house and own it after Mother passes. As you indicated, Mother has had enough in dealing with the house and Sister #1's tenancy there, and has thrown up her hands. Someone might need to pitch in and help.

I can truly appreciate this situation because I find myself dealing with a similar family home issue and my own Sister #1, but at least in my case, Sister #1 listens to me and my other sibling is simply out to lunch over management and maintenance of the house. But in my case, even though I don't like it one bit, I had to step in and manage and navigate the home ownership issues for my family. I think you or Sister #2 might have to step up for your Mother and deal with this situation.

If you sell the house to someone other than Sister #1 -- contrary to what seems to be your Mother's wishes (and Sister #1 will certainly complain about this and probably suggest you and Sister #2 manipulated Mother to do this) how will you handle the proceeds -- do the proceeds go into Mom's banking accounts with the POD beneficiaries? Moreover, regarding having all assets pass outside of probate, this might not be a good idea -- as mentioned before, how will Mother's bills be paid, such as funeral expenses, medical expenses, that are posted after death -- if all the assets pass outside of probate, the beneficiaries of the POD and insurance policies, presumably all siblings, now have to agree to the payment of these expenses, when it's far more efficient to have an executor under a Will with assets in the estate handle these payments.

Finally, even the best intentions and plans to sell this house to someone other than Sister #1 can go awry, given the age of Mother. What happens if you're about to close on the sale, and Mother passes away? This actually happened to us: about to close on the sale of MIL's former residence, my wife had the POA to do so (it was too time consuming to have the residence transferred to a Trust), and MIL at 98 passed two weeks before closing. Our buyer walked away from the sale, and we had to restart the sales process after we went through Probate to sell the house.

 

[FI_RElater]

{Now, if you think about it...with the mom at 108....
the three sisters are all probably in their 70's and 80's!!
So it's also the case that either of them could also have "difficulties" before the mother passes. The later info on the age of the mother sure seems to be a bit of a game changer...
That the mother and house is in Florida, and there's POD on other assets along with other legal framework being in place, should make it easier. }

...and whenever those 30/40 somethings talk about RE we can bring up this thread..."remember that thread about the 108 year old retiree... then they get to really think how long they might have to be retired

 

[RetiredHappy]

If you and sister 2 don't need the money, why not help sister 1 and not make it 3 equal shares? My sister and I gave up some of our inheritance money to our less well-off siblings.

 

[pb4uski]

....Capital gains if we pass this on now and sold later should fall well within the limits where no taxes are due. The only thing going through probate will be the house at this juncture. All other assets, bank accounts, annuities, and life insurance policies already are POD. ...

Which is why the easiest thing to do at this point is to have mother sell house to sister #1 with $120k seller financing in the form af a mortgage note with no required mortgage payments but a $120k balloon x days after your mother's passing... no assets to go through probate.... sister #1 can then pay off the mortgage from the other assets that she will inherit and executrix can make sure that happens (and that mortgage is discharge is recorded).

Alternatively, mother can revise will so sister#1 inherits the house and the other two each get $60k more.... but that doesn't fulfill mother's desire to be done with the house.

 

[tulak]

+1 for pb4uski’s idea. It’s a clean solution to a potentially difficult problem. If I was in this situation, that’s the approach that I’d take.

 

[Lstansbury]

just went through this. The stepped up basis is a big deal. Taxes on this are tricky for the seller and the buyer. Use a CPA, it cost us about $180 and saved a lot of heartache.

 

[piccolopat]

Have mother transfer house to sister #1 and the other two sisters each get a $60k mortgage note with the home as collateral. Mortgages would require no principal or interest payments but is due in full within x days of mother's passing. The mortgage notes give sisters #2 and #3 surety that they will get their "fair share" assuming that house is worth $180k. Sister #1 can pay off other two sisters from her 1/3 share of the $520k of assets (or whatever is left).

If mother lives long so the remaining assets are insufficent for the sister #1 to pay the mortgage note, you can always either forgive the remainder or negotiate acceptable payment terms or sister #1 can refinance with a bank and pay you off.

If the other $520k of financial accounts have beneficiary designations of 1/3 each then you should be able to avoid probate entirely and have a quick path for the sister with the house to pay you off.

These are excellent suggestions.