Q. My mother is in a nursing home and doesn't have long to live, although mentally she is fine. Her only asset is her house. To avoid probate, someone told her to create a living trust and to put the property in the trust. That way, when she passes, the property will transfer to whoever she specifies in the trust.
We spoke to a few attorneys but they all want $2,000 or more to create the living trust. None of us have that kind of money. Is there a cheaper way we can accomplish passing the house to me and my sister upon my mom's death without spending $2,000, yet still avoiding probate? Or should we just have her give us the property now?
A. In most situations, it makes financial sense to have the property pass upon your mother's death. This way, you enjoy the benefit of the "stepped up" basis. This means when you sell the property, any capital gain would be computed using the date of death value of the property as the cost basis, rather than what your mom paid for the property, probably many moons ago. The difference between the cost basis and the net sale price (after costs of sale) would constitute the capital gain, if applicable.
I have two options for you. One, you could convey the property into a land trust, which could be created at any bank or title company with a land trust department. Your mom would be the beneficiary under the trust. The land trust agreement could contain a provision that upon the death of your mother, the beneficial interest would pass to you and your sister. The two of you would then control the property and could do with it whatever you saw fit.
The creation of the land trust would be far cheaper than creating a living trust, usually under $200. You would also be required to prepare a deed into the trust (the land trustee would probably be available to perform that duty) and to record that deed, which costs around $50.
If you and your sister are your mom's only heirs, there is probably an even cheaper solution. In simple heirship situations, most title companies, upon your mother's death, would allow you and your sister to sell the property with an Affidavit of Heirship. This affidavit would state your mom is not married and that you and your sister are her only children.
If your mom has a will, that could be submitted also. Obviously, the will would need to state that the property would go to you and your sister. It is my experience most title companies, under these facts, would ensure a sale with you and your sister signing the closing documents.
Before moving forward, I would discuss with your sister the plan once you obtain control of the property. More problems could arise if one of you wants to sell and the other wants to retain the property. I would suggest consulting a real estate attorney to determine which option would work best for your situation.
Q. My tenant stopped paying the rent so I went to the courthouse and filed the eviction papers. On the court date, the judge gave me an Order of Possession but said I could not do the eviction for two weeks. Just before the two weeks was up, I got something in the mail saying that my tenant has filed bankruptcy. Does this mean I can't have him evicted?
A. For now, yes, that's exactly what that means. Once a party files bankruptcy, no party may take any action against the debtor (your tenant) without permission from the bankruptcy court. This is called the "automatic stay."
You, or more likely your attorney, will need to file a petition in the bankruptcy court to "lift" the automatic stay. In the event that petition is granted, you could then proceed with your eviction.
I would suggest speaking to a bankruptcy attorney for further direction.
Ÿ Send your questions to attorney Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by email to firstname.lastname@example.org or call (847) 359-8983.Copyright © 2014 Paddock Publications, Inc. All rights reserved.