Dec 31, 2010

Adding Names to House Title

house.jpgDear Liza: I live in Illinois my mother owns a home worth about 250 to 300K. My mother seems to think there is some benefit to having my brother, sister and myself added to the title and having her removed.  I know the current lender will not approve of that unless we refi with our names.  If we were able to refi and remove my mother or if there was no mortgage balance is this a good idea?  All she is trying to do is ensure that we do in fact inherit this house when she does pass on.  Wouldn't naming us as equals in the will do the trick?  Will the house and any estate still go to probate even if there is a will and we are all alive and civil with one another?  If your Mom just wants all three of you to inherit the house, she should use a will, or a living trust, to make sure this gift is made upon her death, not put you on title now. Putting you on title now means that she's made a gift to each of you of 1/3 the value of the house, means that her house is subject to your creditors, and means that all three of you get the house at her original cost basis (what she paid for it). Inheriting the house upon her death means that she controls it during her lifetime, and that upon her death you three inherit it at the current market value (which probably means you'd pay less in capital gains taxes if the property is subsequently sold). If she makes the gift by will, you will be subject to probate, regardless of whether all three of you get along (which is, of course, great, but legally irrelevant). If she creates a living trust, the property can pass to you three free of probate.