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

[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]

Quote:

Originally Posted by jpjr 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]

Quote:

Originally Posted by 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.

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]

Quote:

Originally Posted by jpjr ....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]

Quote:

Originally Posted by pb4uski 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.

[jpjr]

Solution:

Mom will "gift" 1/3 of home to Sister #1. Sister #1 will then be able to have insurable interest in the home and the insurance policy will now include both parties as named insureds. All property taxes , HOA documents etc will now have Sister #1's name so she will be able to assume those responsibilities.
A separate document will outline Sister #1's responsibilities to pay all costs associated with the home as well as her duty to utilize any proceeds from the estate to pay each sibling their 1/3 share of the "current" value of the home which will be determined prior to signing the document later this month.
The one item not addressed in the "mortgage" scenario is that any funds that Sister # 2 and I would have received would be considered income, which this revised process avoids.

[ivinsfan]

jpjr, I like a person that get stuff done. Don't pay any attention to the nit-pickers posting after me.

[robnplunder]

Giving advice on this kind of question is fraught with danger as we don't know all the sides of the story. There are too many unknowns here. Good luck with the OP and his family in sorting this out.

[pb4uski]

Quote:

Originally Posted by jpjr Solution: Mom will "gift" 1/3 of home to Sister #1. Sister #1 will then be able to have insurable interest in the home and the insurance policy will now include both parties as named insureds. All property taxes , HOA documents etc will now have Sister #1's name so she will be able to assume those responsibilities. A separate document will outline Sister #1's responsibilities to pay all costs associated with the home as well as her duty to utilize any proceeds from the estate to pay each sibling their 1/3 share of the "current" value of the home which will be determined prior to signing the document later this month. The one item not addressed in the "mortgage" scenario is that any funds that Sister # 2 and I would have received would be considered income, which this revised process avoids.

So you mom still owns 2/3 of the house?

I don't understand how sister#2 or OP would ever have income with the mortgage scenario... the mortgages that you receive from your mom would have been gifts from her to you just like the 1/3 of the home from mom to sister#1 is a gift.

But I'm glad you have found a solution that you are all comfortable with.

[UpQuark]

I'm glad that the current house value is going to be determined, since sister#1 was wanting repairs I wondered if she'd be getting 1/3 of an ideal value and then be stuck having to make costly repairs.

[jpjr]

Final resolution: Enhanced Life Estate Warranty Deed where Mom gifted 1/3 of the home to Sister # 1 and in turn, Sister #1 signed a Property Agreement stating she will pay her two siblings their 1/3 share within 30 days of Mom's passing. Sister #1 is now responsible for all costs associated with the home.

[skyking1]

thanks for the follow up.