Just paid off my mortgage (Hooray) and I want my son to

[Bobbieo]

have this house when I'm gone. What is the "right of survivorship" and where do I get such a document?

[rwheeler31]

1. Congrats

[SheilaT]

2. Contact an attorney.

There's more than one way to do this, and it will depend somewhat on the state you live in.

You should have a will. If you don't, you need one. Contact an attorney.

[JDPriestly]

27. Absolutely see a lawyer. You may want to be careful about

owning property in the way I think you are suggesting. There can be serious drawbacks to this for of holding title.

In California this is called joint tenancy with right of survivorship. Don't be cheap about checking with a lawyer. By lawyer, I do not mean an internet site or a real estate agent. You need to actually talk to someone who knows real estate law in your state pretty well. Call your local bar association for a referral.

[tularetom]

3. Just make out a will and specifically mention

that you are leaving the property to him. I'm not a lawyer but I think the term "right of survivorship" applies to property owned in common by two or more people. If one of them dies the rest have such a right.

[JDPriestly]

28. I don't want to be impolite, but if you are not a lawyer, you should

not give legal advice.

[tularetom]

33. "Make out a will" is legal advice?

Jesus friggin christ if I'd known being a lawyer was that easy I would have gone to law school.

[JDPriestly]

37. You can't just make out a will to change title to right of survivorship.

The original poster needs to see a lawyer to discuss the specifics of her situation.

[tularetom]

38. Of course she needs to see a lawyer

All I'm sayin is that a will is the instrument by which she can most easily convey title to her son upon her death. Which is what she wants to do.

[HCE SuiGeneris]

4. Talk to your local Title company, and,

congratulations!

[rwheeler31]

5. Wow

[Sanctified]

6. Get a lawyer and figure out the best way to transfer it to him

after you are gone where he will pay the least amount of taxes.

[Lex]

7. May vary state to state but here in NC

specific language must be drafted into the Deed and after signing and notarization, the Deed must be recorded at the county Register of Deeds office.

Please investigate the tax ramifications as it may trigger gift tax to one or both of you.

[rucky]

8. What about all the tax breaks you're missing out on?

Just kidding.

Mazel Tov!

[Lucinda]

9. I think I may have to be jealous for just a minute.

There, I'm better now.:D

Congrats!!!!!!!

There are ways to do it without lawyers, but what is required depends on what state your're in. Here are a few links to research the basics...Your local bookstore would have a book of recent forms that can be used (and notarized) to do it yourself. And attorney is a good idea though, if you can spare the fees.

It can transfer through probate, but attorneys will collect fees, it looks like you can use a transfer on death option in AZ, and there may be a way to setup a trust. Some of these options may reduce or eliminate inheritnace taxes.

http://www.keytlaw.com/azprobate/probatefaq.htm
http://www.uslegalforms.com/az/AZ-019-77.htm
http://www.azprobate.com/transfer.htm

[Bobbieo]

12. My late husband and I bought the house in 1980 so it has been a long haul!!!

Thank you everyone for your kind responses. They are greatly appreciated.

[orleans]

10. maybe check out putting his name on the house title with you

that might help him not pay an estate/inheritance tax

[Kingshakabobo]

13. That could open them to gift taxes.

[Kingshakabobo]

11. A living trust is probably your best bet.

You create the trust, deed/transfer the property in to the trust and designate him as the beneficiary. As beneficiary, he gets he property when you die.

If you quitclaim him on to the property as a "Joint Tennant with right of survivorship" you could open yourselves up to gift taxes since it wouldn't be "inheritance" as you are still alive.

Here is a FAQ section fro NOLO, a big player in the self help book market.

http://www.nolo.com/article.cfm/objectId/02B5FD86-BB5F-4F9C-88C5ED4A0D7F64BC/309/227/FAQ/

Property you transfer into a living trust before your death doesn't go through probate. The successor trustee -- the person you appoint to handle the trust after your death -- simply transfers ownership to the beneficiaries you named in the trust. In many cases, the whole process takes only a few weeks, and there are no lawyer or court fees to pay. When all of the property has been transferred to the beneficiaries, the living trust ceases to exist.

[WillowTree]

14. That's more or less what my folks did.

Everything was in two trusts and we (my sisters & I) were the beneficiaries. Technically, we owned the house and everything in it, the cars, the stocks...all of it. We had some issues with the retirement community they lived in because they require that all units be owner-occupied and technically the folks didn't own the house (but none of us were old enough to live there...LOL). In the end, it all got worked out and it saved us many hassles after they died.

[Kingshakabobo]

16. It's become easier in the last several years as more people are using them.......

As a mortgage lender, I used to cringe when clients mentioned trust. Now it's just another couple pieces of paperwork for us.

Our only stipulation is that the trust must be a "revocable" living trust - I think, that in the event the loan gets foreclosed, the trust can be revoked or dissolved. I assume it would be the same for a retirement community and I assume they are more comfortable with trusts these days.

[WillowTree]

20. In our situation, that wasn't an issue.

The retirement community the folks lived in didn't allow mortgages. We owned the house outright...........and sold it for 98% of our asking price in 5 days.

[Kingshakabobo]

23. Yes, I was referring to, in your case, how title was held.

[SheilaT]

15. I want to repeat that you need to contact an attorney.

It will not cost you very much money. Ask up front what he/she will charge.

Simply adding your son to the title will not trigger gift taxes. But he will not get the "stepped up" value when it becomes entirely his after you pass on.

Here's is a simplified version of what I'm talking about, and I'm simply inventing all of the numbers.

Let's say the original price of your house was $50,000. In the process of paying it off, your mortgage payments probably amounted to $150,000. But that's not too terrible, as you did have the mortgage interest deduction all along. So now your house is paid off and all these years later it appraises at $100,000. You put your son's name on the title with you. Next month something terrible happens and now the house belongs solely and entirely to your son. Two months later he decides to sell it. And it sells, quickly and neatly for the $100,000 it's worth. He will owe capital gains on the $50,000 profit (what it sold for less the original price. I'm leaving out other potential profit-reducing expenses that a realtor or tax attorney can help you with). He'll give up 15%-28% of the profit ($50,000) depending on his income tax bracket.

However, if you will it to him (and you should have a will no matter what you decide to do), and you come to an untimely end again next month, he'll become the owner of the house, but his starting value on the house will be what it was worth when you died, in this example I'm giving, $100,000. So if he sells it six months later for $100,000, there's no profit, and he won't owe an capital gains taxes.

I realize that your exact number will be different -- probably substantially different -- from what I've invented here. Keep in mind also that estate taxes don't currently kick in at the federal level on estates under (I think this is the current amount) $2,000,000.00. The states themselves vary quite widely as to where they kick on on estate taxes. If you have any kind of substantial estate you need serious estate planning. And even if you have nothing besides the house and your personal property you need a will. Contact an attorney.

[Lex]

17. "Simply adding your son to the title will not trigger gift taxes."

I don't believe that is correct. It is the same as gifting him half the value of the house, iirc, if she adds him to the Deed.

[SheilaT]

24. No. Just putting someone else on the title

is not the same as making a gift of half the value of the house.

I have actually been through this several times, involving a place my mother (now deceased) owned. Originally it was in her name and my name. Then I did a quit-claim deed and she put my younger brother on the deed. After Mom died, it became younger brother's. Because his health isn't all that good, he then added my name back to the title. After discussions within the family, it made more sense for a different sister to be on the title and to eventually own it (younger brother is not in good health). So I did another quit-claim deed and sister's name is now on the title. No gift taxes have ever been incurred.

Trust me on this. What putting someone else's name on the deed accomplishes is to keep the property out of probate, since the ownership simply shifts from the joint to the survivor. And, as you see in what I described above, a property could theoretically be passed on indefinitely this way. But if, instead, it is willed to someone, the stepped up value aspect takes effect, and that could be remarkably valuable down the road. Think, for example of a ranch home in, say southern California that cost $20,000 (or less) fifty years ago, and today is worth half a million dollars, even with a decline in house prices. There's a huge difference in the taxes once that house is sold, if its cost basis is $20,000, or if the cost basis is $500,000. And, depending on how much else is in the estate of the owner of this not-entirely-hypothetical property, it may well be that no estate taxes are due, certainly not at a federal level. I have no idea where they kick in for California. Most states have a much lower threshold for taxing estates than does the federal government.

In short, there are different advantages to joint ownership with right of survivorship and willing a house to someone, and this is where talking to an attorney who handles such things is a good idea.

[Kingshakabobo]

25. You are correct as long as the deed/title doesn't transfer completely to the son prior to death.

As long as mom retains use and benefit of the property, the "gift" is not completed until death - and then it becomes inheritance.

I WILL say, quit claiming the son on the title opens the property up to risk from the sons actions - creditors, IRS, law suits etc.

[SheilaT]

39. Why do you think a quit claim deed

opens the property to risk? A quit claim deed is simply (if I understand it correctly) a document in which a person renounces all interest in a property. Of course, if the person who now owns the property has issues with the IRS or creditors, those things won't go away.

[Kingshakabobo]

41. In the scenario I'm talking about, and I thought you were too, mom stays on title....

.......therby retaining the use and benefits of the property(this avoids gift tax). In other words, she DOESN'T renounce ALL interest in the property. She adds the son as the poor man's way to estate planning - but she also brings with it the risks the son brings to the table.

Perhaps the confusion is from the terminology we use. We call adding the son "quit claiming him on." A quit claim is still prepared to ADD the son.

[Lex]

26. Just because the gift taxes forms weren't filed, doesn't

mean they weren't incurred.

Deeding real property back and forth between family members is not exempt from triggering gift tax. If A adds her son B to the deed, then that is gift of the value of the equity owned of the property.

Receiving ownership of property (real property or personal personal) as a gift, *is* a gift if the person giving the property is not paid for it.

See ---> http://www.irs.gov/businesses/small/article/0,,id=164872,00.html

[SheilaT]

40. The property is not exactly being deeded back and forth

between family members. One person is simply adding another to the title. There is no transfer involved. The ownership is now joint with right of survivorship. I still maintain that no gift taxes are incurred. And the lawyer we have used each time has never suggested that anyone needs to worry about gift taxes. If you deed the property over entirely, then there's a gift as in the link you posted.

Gift taxes, for those who aren't totally clear on this, are paid by the person making the gift, not by the person receiving the gift.

There are other reasons why people prefer to leave property to children in a will rather than do the joint ownership with right of survivorship, and that's mainly for the benefit of the stepped up value for tax purposes once the property is sold. I can't recall what the current profit allowed on a home is before federal taxes are triggered -- oh, wait, this is what Google is for. . . . here we go: it's $250,000 profit for a single person, double that for a married couple. So the house I referred to above that's been deeded several times within my family is still significantly below that trigger point in value.

[Warpy]

18. Paralegals will do the paperwork for the fraction of the cost

of an attorney. They will explain all the types of arrangements you can enter into with your son, including the transfer on death arrangement.

While you're doing that, make sure you get a durable power of attorney for medical decisions and that you have a living will spelling out what you want and don't want. It will make sure he has a house to inherit.

[Raejeanowl]

19. Sincere Congratulations

See an attorney. And have fun laughing when you get the re-financing offers!

[proud2BlibKansan]

21. Congratulations

I paid mine off last year. It's a great feeling.

[nadinbrzezinski]

22. Congrats and JUST IN TIME

hard times are a'comming and this is certainly one way to protect yourself

[Bobbieo]

29. Thanks again for all of your responses. They are greatly appreciated as

I scrimped and saved to get this done. I know what is ahead for our country and I feel so lucky to be mortgage free. I feel so badly for all of the people undergoing foreclosures.

I probably will be inundated with refinancing proposals. Can't wait! I may be an old lady but I still know the power of my left middle finger!!!

[SoCalDem]

30. Do you only have one son? Do you trust him?

Here's what worries us, and we plan to check with a lawyer ourselves.

We have ONE asset..our house..and once paid off, or with a lot of equity (like ours), we would prefer not to "own" it. We do not foresee needing to borrow money against it, and since we have 3 sons to "leave everything to", we would like to transfer ownership to them BEFORE one of us gets sick and has the house taken out from under the surviving spouse. There are laws in place now that have a "timeline" for transferring properety ( I think I read once that it was 4 years)..

Since you can give tax free gifts of 11K a year, we are wondering (and WILL ask a real estate lawyer), if we could "gift" 11K worth of our house, in lieu of cash. At some point, the boys would own the home, and we would "rent" it from them.

They are young , and could use the "investment asset" on their balance sheets, and it would be comforting to know that if something happened to me or their Dad, that the house would not be snatched up from the one left behind..

[fed-up]

31. look into a living trust-NOLO PRess has a book -in CA current rate is about $1500

to set one up, it may be cheaper to do it yourself or with a paralegal, but that is only if you feel very comfortable understanding and filling out all the forms

A living trust keeps it out of probate (public documents) and helps avoid attorneys when settling your estate

The $1500 fee also includes a pour over will for anything that may have been left out of the original trust.

I was the trustee for my mother's estate and it was a piece of cake to sell the house and distribute proceeds amongst her 6 kids.

Had any one of her kids kept the house (by buying out the other 5) property taxes would have remained the same...

also ask an attorney how putting the house in a living trust can prevent medi-care from seizing it

[Romulox]

32. One thing to be careful of--if you should need Medicaid in the next few years

Transferring the home to your son could be seen as a divestment disqualifying you from benefits..

[GreenPartyVoter]

34. Super!

[ProfessorGAC]

35. Congrats!

We did the same earlier this year.

Any lawyer can set that up for you. Those that do wills, and PoA and things like that can do it in no time.
The Professor

[KharmaTrain]

36. Look Into A Living Will

We did this with both my parents and my mother-in-law's homes. As long as their are no liens and you're not passing along millions of dollars (yeah, like we all are), you should be able to pass the house along through the trust and avoid probate and estate taxes. A good estate attorney should help you with this.

On Edit: I saw the thread upstring and wanted to bring it up again...well worth looking into.