I don't want to lose equity in my house after something happens to me. I want it to go immediately to my son so he can finish paying it off. I know I will need an attorney to fix the papers, but what all will be involved.
Also, could my son lay claim to the house before I pass on or does he have to wait until that happens. Hes the executor of my will and insurance money.
There are different ways you can do this. You can convey the house to your son outright, in which case he is the owner now. or you can convey your house to your son now but reserve a life estate to yourself. That transfers it to him now but gives you the right to use it for the rest f your life. Upon your death, the life interest is extinguished and he owns the present interest. The problem with this is that if you wanted to sell or refinance your property, your son would have to sign everything, since title would no longer be yours. If either of these works for your situation, it is accomplished by means of a deed from you to him, either outright (the first example) or reserving a life estate (the second example).
Another alternative is to create an inter vivos revocable trust with yourself as trustee and convey the house to it during your lifetime, with your son as the contingent beneficiary, and with the provision that on your death it is distributed to him. That means the property is still within your control as you retain the right to revoke the trust any time you wish, should things change. If you don't revoke it, it ceases to be revocable on your death.
In any case, you should consult a local estate planning attorney to discuss these options. Please note that I do not practice in your state and that the above is not intended as legal advice, for educational purposes only.
In Ohio we a have a "transfer of death deed". It works similar to a life insurance policy. You name a beneficiary to take title when you pass. Until that time you retain all control over the property, and can change the beneficiary at anytime. Neither your son or his creditors could claim the property. I suggest you speak to a AL attorney and see if a similar type of deed is available in AL.
I understand the feeling that you want to make certain your home goes to your son. However, step back from the immediate need and think through all of the ramifications. What exactly is it that you are trying to accomplish.
I find that many times clients want to accomplish a very specific goal, but they reach a conclusion based on misinformation or not knowing all of the facts. You may be on point regarding your desire to put your son's name on your deed... but you may also be about to make a big mistake.
Why do you think that you are going to lose equity in your home? Are you ill? Do you have a special need? Are you simply concerned that there won't be enough assets to take care of all of your potential medical bills?
These are very real and valid concerns. Each situtation is very specific and unique to the individual. If you have an illness that you believe will lead to your needing to have extraordinary medical care, then you need to speak with an attorney who is practices in the area of medicaid planning. This is a very complex area of the law, and only an attorney licensed in your state of residence can adequately counsel you on this subject.
If your circumstances are less dire, and you are concerned about future nursing home care, there are a number of issues to consider when transfering assets to your son.
First of all, but putting your son on your deed as a joint tenant, you subject your property to his potential creditors (for example, a divorced spouse). Additionally, you make a completed gift and you may be subject to paying gift taxes, depending on your particular circumstances. Another problem is that in the future, after your death or incapacity, he decides to sell the residence, he may have capital gains tax issues since his "cost basis" in the home is what you paid for it. Finally, there is a look-back period for gifts made in anticipation of qualifying for medicaid. If you give your house to your son, it is still included as an available asset to you for 5 years, at the minimum. (Look back period laws vary from state to state.)
Another option may be creating a life estate on the residence for yourself, and giving the remainder interest to your son. That is a technique to transfer the value to your son at the time of your death. However, it can be a very bad idea depending on your circumstances. Personally, I do not like to use the life estate option because of gift and estate tax consequences. An estate planning attorney licensed in your home state will be able to advise you regarding the gift and estate tax ramifications.
Another problem with including your son on the deed is that if you make such a transfer, you may be liable to pay off your current mortgage. Your mortgage likely has a "due on sale" clause in it. When you put another name on the deed, it is as if you have sold the residence. The mortgage company may force you to refinance and include your son on the mortgage.
The best option may be for your to make sure that your estate plan provides for you son. Using a Last Will and Testament, or a Revocable Trust, you can provide that your residence passes to your son at the time of your death without the problems of exposing yourself to his creditors, gift taxes and capital gains tax issues.
If, however, you still feel that it is important to transfer your residence to your son prior to your death, then you need to speak with a qualified estate planning or elder law attorney about the details of your situation and the specific laws of your state.
Many times people are able to transfer assets as you have suggested, putting a child as a joint tenant. If all goes as you hope, and no problems come up, then you feel as if you have accomplished your goals. However, if something unforeseen occurrs (such as a divorce, a bankruptcy, or other lawsuit) you may find both you and your son exposed to unnecessary risk.
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