Drawbacks to giving home to kids

Q. I am a 70-year-old homeowner who is thinking of putting my home into my two daughters' names. I would appreciate advice on the pros and cons. I need help with the who, where, when and why.

A. The process is simple. You have a lawyer draw up a new deed naming your daughters as owners, you sign it, and it's entered in the county's public records. Unless you have a mortgage, that's about it.

There's no way, though, to judge the pros and cons without knowing a lot about your health, the size of your estate, the health of your daughters' marriages, the value of the home, how long you have owned it - and that's just for starters.

Perhaps some family complication is involved and you want to head off future challenges to your daughters' inheritances. Whatever your goal, you and your daughters should go together to a lawyer who specializes in estate planning, and discuss it.

Meanwhile, here are some drawbacks:

• If you are receiving senior property tax discounts, those would no longer be available.

• If you want to qualify for Medicaid some day, remember there's a look-back period. Transfers made during the preceding five years are still counted as your assets.

• If you worry about estate tax: You can leave $5 million before any federal tax is due. You can ask that lawyer if yours is one of the few states with an estate or inheritance tax.

• Once you no longer own the house, you can't claim the homesellers' tax break if you ever decide to sell. Your daughters would owe capital gains tax, figured from your cost basis rather than the value when they received the gift. (In certain circumstances, you might retain that tax break; the lawyer can explain.)

• If, on the other hand, your daughters wait to inherit the property, they'll receive a "stepped-up" cost basis, value at the time of death. If they sell for about that amount, no taxable gain.

Again, a lawyer can consider the whole situation and advise what's best for you.

Q. We have a family home now in probate. Four heirs are owners per the will. My sister is the executor and does not have it up for sale. I feel it should be. My nephew, son of the executor, is living in this house rent free. Is this legal? I believe he should be paying some rent.

A. You could go to court and force a "partition" - a public auction of the property for immediate cash, with division of the proceeds. That's a nasty step to take and won't do much for family harmony, nor does it usually yield full market value.

Meanwhile, who's paying property taxes, insurance, utilities? Perhaps the nephew should be bearing those expenses, or paying rent that could be split four ways.

It'll be sad, though, if this ruins family relationships. What do the others say? Try to move softly with this one.

Q. Four years ago, my three siblings and I were selling my deceased mother's house. We accepted a purchase offer in August 2011, and the buyer gave a $500 deposit to be held by the real estate company. The contract said if the sale didn't go through, the deposit would be returned, except up to $400 to repay legal costs the seller had already incurred proving title.

By October 2011, things went wrong and the deal was dead. Nobody could track down the buyer. Our lawyer told us to contact our Realtor, who contacted the buyer's Realtor, who contacted the buyer's attorney, who never addressed the issue. We just can't seem to make progress and hope you may be able to point us in the right direction of receiving the $400 that is rightfully due to us.

A. This sounds familiar - I wonder if you or one of your siblings wrote in about this before? It's a lot of fuss for a relatively small amount of money, but I understand how you feel.

I'm sure the Realtor holding that deposit would like to get rid of it. He or she can't do so without written authorization. It sounds as if everyone is just passing the buck.

You could take the brokerage to small claims court and tell your story. I'm not a lawyer, though, and I don't know if small claims has authority over money held in escrow. It wouldn't be fair to make the Realtor pay you out of personal funds.

You could take that elusive buyer to small claims - use last known address. If you're still not ready to give up, you can try complaining to the state agency that administers real estate licenses.

• Edith Lank will respond personally to any question sent to edithlank@aol.com or to 240 Hemingway Drive, Rochester NY, 14620.

© 2015, Creators Syndicate