How to leave house to kids

[Happy prose]

Just curious- how are you all leaving your house to your children? I'm in NJ, one adult/married child. She is beneficiary on my accounts, but there seems to be too many cons to adding her to deed of house. I'm currently renting, plan to buy a house in retirement community towards the end of this year. Did you set up a revokable trust? If so, about how much did that cost? I wish NJ had that Lady Bird deed.

[jerseygirl]

Don’t put kids on deeds , better to inherit as they get value at inheritance, not from purchase. Eg, if you bought house for 300,000 but it’s worth 600,000 at inheritance . If kid sells then no tax selling for $600000 or just tax on any increase from inheritance

If kids are on deed , if they sell for $600000 then they’ll owe taxes on the gain from $300000

We just put in will, split evenly .Since we have 3, 1/3 each
Doubt any of them will want to move in , they’ll sell

[Happy prose]

@ For sure my daughter will sell. I was hoping she could avoid probate.

[jerseygirl]

May 18, 2022 17:24:03 GMT -5 Happy prose said:

@ For sure my daughter will sell. I was hoping she could avoid probate.

To avoid probate then think a trust may do this
But is probate costly or complicated in your state?
I sold my sisters condo that was inherited by my kids (niece and nephews)
Just used a real estate lawyer and did probate myself. Inheritance was only the condo which was in a trust. Clerk in probate office was very helpful and think charge was only about $100

[Happy prose]

I don't know much about it, just sounds like a pain in the @ss!

ETA: I'm in NJ too.

[jerseygirl]

May 18, 2022 17:35:28 GMT -5 Happy prose said:

I don't know much about it, just sounds like a pain in the @ss!

ETA: I'm in NJ too.

Yes anything to do with government is a BIG PIA
But the gubmint has its hands in most everything doesn’t it!!

[Tiny]

May 18, 2022 17:35:28 GMT -5 Happy prose said:

I don't know much about it, just sounds like a pain in the @ss!

ETA: I'm in NJ too.

Perhaps this would be helpful?

www.investopedia.com/terms/p/probate.asp


I think for an estate that's not complicated and when a will is involved and when there are no complications with the heirs - probate amounts to paying a fee and waiting for the paperwork to be done.

from the linked article:

Probate is the legal process for reviewing the assets of a deceased person and determining inheritors.

Probate proceedings are typically focused on the existence of a will.

A probate proceeding is not always required upon death but is usually essential when a deceased
person’s remaining estate is of high value.

Individuals can avoid exorbitant probate costs and complexities by having an easily authenticated will or using investment vehicles that do not require probate.

If you are trying to make it "easy" for your heirs - I would make sure that your executor has access to "cash" - so they can wake/funeral/bury you (and maybe give you a nice headstone - or get your name on an existing one), and so they can maintain your house/vehicles (as in insurances, monthly bills, property taxes,etc.) for the 3 or 4 months (or longer) that it may take to complete all the transactions associated with your untimely demise.

The probate thing just kind of goes along with all the other moving parts of the process.

[CCL]

In Indiana there's a form you can complete, notarize and file with the county that transfers the property on death. I forget what it was called but our attorney drew it up, we signed and notarized it and the county recorded it. It was much simpler than I expected.

eta: A quick Google search brought this up:

www.cchalaw.com/our-news/what-is-a-transfer-on-death-deed#:~:text=The%20Basics%3A%20Transfer%20on%20Death,in%20real%20property%20without%20probate.

Maybe your state has something similar?

There's also a transfer on death option for motor vehicles.

[gacpa]

Missouri has "beneficiary" deeds where you can designate who will gain ownership of your real property upon your death.  Sounds like the same thing as transfer on death deed.

[Happy prose]

NJ doesn't have that option. I (think) I read somewhere only 19 states have it.

[Happy prose]

Tiny Thank you. Can the executor be the same person as the beneficiary? Also, is it ok to only put the house in the will, not accounts?

[jerseygirl]

We also put our kids names as beneficiaries on all of our bank, IRAs, insurance etc
No need to probate any accounts that have named beneficiaries or TOD (transfer on death). Banks only allowed 2 beneficiaries so Jerseyguy and I on these accounts with our YDS who is executor.
So only house snd cars would need title transfers and probate

I’m assuming furniture etc would just be either used by them, donated or sold

[Happy prose]

jerseygirl Correct. I'm still curious about how much it costs to set up a trust. Probate, even with a will, sounds like it could take a year or so. She would have to pay taxes and HOA until then. Currently, my car is leased, but that could change by the time I die. 

[jerseygirl]

Probate for my sisters condo (she had a will leaving inheritance to her niece and nephews) took about 3 months. This was in 2020 when surrogate court was closed to public but we did things by email. Notarized by using drive in bank notary. So not that long even during pandemic lock down

[bookkeeper]

Arizona also has a transfer on death option for real estate.

[Sharon]

Oregon also has the transfer on death option and that it was I have used.

[The Walk of the Penguin Mich]

May 18, 2022 17:21:05 GMT -5 jerseygirl said:

Don’t put kids on deeds , better to inherit as they get value at inheritance, not from purchase. Eg, if you bought house for 300,000 but it’s worth 600,000 at inheritance . If kid sells then no tax selling for $600000 or just tax on any increase from inheritance

If kids are on deed , if they sell for $600000 then they’ll owe taxes on the gain from $300000

We just put in will, split evenly .Since we have 3, 1/3 each
Doubt any of them will want to move in , they’ll sell

This!  My dad did this, and we wound up having to pay tax on it.  We paid tax on the stepped up basis, but it was still painful parting with a chunk of $$.

[Bonny]

From what I've read over on Bogleheads probating a will in NJ isn't a big deal. I would think especially in your case with one child it isn't going to be difficult. Make sure your bank accts and investments are POD so your daughter can pay the bills on whatever home she might inherit.

We use Trusts here in CA a lot because our court system is so slow and expensive. I probably wouldn't go that route in other states unless I was dealing with a special needs situation or complicated estate.

Do make sure that in addition to preparing your will that you get your state's equivalent of a durable POA and medical POA. More than $$$ is the heartbreak of dealing with a parent with limited capacity.

Good luck with your plans and congratulations for thinking about it.

[tskeeter]

May 18, 2022 17:21:05 GMT -5 jerseygirl said:

Don’t put kids on deeds , better to inherit as they get value at inheritance, not from purchase. Eg, if you bought house for 300,000 but it’s worth 600,000 at inheritance . If kid sells then no tax selling for $600000 or just tax on any increase from inheritance

If kids are on deed , if they sell for $600000 then they’ll owe taxes on the gain from $300000

We just put in will, split evenly .Since we have 3, 1/3 each
Doubt any of them will want to move in , they’ll sell

As I understand it, transferring significant assets via a will guarantees that an estate must go through probate. (Some states have a minimum dollar threshold before an estate must be probated.).  Probate can be avoided if the house or other assets are held in a trust, have designated beneficiaries, or there is some other legal device, such as a transfer on death deed, available in your state.  Most homes are valuable enough to justify a consultation with an estate planning attorney to determine the most effective way to hold and transfer a house.  It’s definitely not a DIY project,

For my Dad’s estate, it cost $14,000 in legal fees and took 10 months to run a $400K house and a used car through probate.  It would have cost about $3K, here in NV, to create a trust to hold and transfer the house and the car was not worth enough to meet the minimum threshold to require probate.  Overall, because of probate, it cost Dad’s estate more than 4 and 1/2 times what it should have to transfer the house to the heirs.

[TheOtherMe]

My dad's will was only cash and it took over a year to be settled.  

My parents had sold their house many years before they died.  We were so happy we didn't have to sell a run down house.

[Happy prose]

tskeeter TheOtherMe These are the horror stories I hear. Do either of you know anything about a trust? My husband and I will both own the house. Can the trust be written that it goes into effect when we're both dead? And I guessif we both own our cars, we should list them too?

[pulmonarymd]

You need to talk to a lawyer. They will be able to answer the questions and the pros and cons. It will also prevent you from making a big mistake and will be far less expensive in the long run. It is so dependent on state laws no one can really answer your questions

[TheOtherMe]

My parents didn't have a trust.  Didn't have the kind of money to justify the cost.  

To be fair, my dad's estate happened during Covid and it was difficult to meet with the attorney.  Meetings with the attorney were over the phone and then paperwork that needed signed would be put in a box and we would have to go and sign it and return to the box.

Everything he did with the court was virtual. 

There was a clause in his will that made everything have to be done perfectly and legally.  All the dates had to be followed.

He had to sell the final resolution because my half sister wouldn't sign any of the paperwork.  That slowed it down.

We did get the life insurance and IRA proceeds immediately because we were named beneficiaries.  

Even though we were joint tenants on the bank accounts and could still write checks to pay expenses, it had to go through probate because of that clause.  Any attorney would have handled it the same way.

[swamp]

May 20, 2022 5:23:52 GMT -5 Happy prose said:

tskeeter TheOtherMe These are the horror stories I hear. Do either of you know anything about a trust? My husband and I will both own the house. Can the trust be written that it goes into effect when we're both dead? And I guessif we both own our cars, we should list them too?

You really need to make an appointment with a lawyer. 

I know a whole bunch about trusts, probate, life estate deeds, and various other estate planning techniques, but I'm not going to pretend to be able to give you a solid answer without asking you lots and lots of questions, as well as being familiar with the laws in your state. 

My parents have a life estate deed.  That is what is appropriate in their specific situation. 

[Tiny]

May 18, 2022 19:03:29 GMT -5 Happy prose said:

Tiny Thank you. Can the executor be the same person as the beneficiary? Also, is it ok to only put the house in the will, not accounts?

I believe so. It might be a state by state thing... the "executor" is the person who is officially acknowledged as having responsibility for handling the estate.
My oldest brother was designated as the "executor" based on the conditions set in my mom's will. He got to handle all the paperwork and disbursements and what not from the "estate". The majority of that work involved selling the family home and disbursing the proceeds from the sale as per the will.

Even when all your accounts have beneficiaries, etc... someone still needs to handle all the paperwork (calling any insurance agencies, call Social Security (if appropriate), closing credit card accounts, changing bank accounts/financial stuff, arranging for burial (and a wake/funeral), canceling any appointments that were set up - doctor's apppts, or social appts, trying to get refunds for stuff (if someone dies suddenly).

My mom was very active and passed suddenly (at 75) she had a "full calendar" so we had to cancel 2 future trips (got refunds for both of them) and about 3 months of future appointments and social engagements. In theory the executor would be in charge of this - as they would have the death certificates and ability to cash checks or direct any sort of electronic refunds to the appropriate accounts. FWIW: I did some of the leg work on these for my oldest sibling. but my oldest sibling had the most control over the financial accounts by the time these things were being completed.   

It took about 3 or 4 months to wind down/close out all the social/personal stuff my mom had going - as in the things that came with a refund of $$ or needed some sort of acknowledgement that the thing was "closed" and completed.   


I'm guessing it would be most helpful for you to talk with a professional - lawyer?  about how best to set up your will and financial and personal stuff  so that your beneficiary/executor can accomplish what it is you want done.   

It sucks to have to spend a little bit of money to do this - but really it comes down to do you want to be "penny wise and pound foolish" or do you want to wisely spend some money now to get a better/best outcome in the future?? 

I'm not saying that right I think... but hopefully you get the idea...   sometimes it pays to spend now so that the future is smoother/better. 
 

[Happy prose]

swamp Thank you. I will for sure be using a lawyer, but I just looked up life estate deed, and sounds interesting. I'm wondering if the retirement park/community will allow it, or if they have no say in the deed. One of the rules is you have to be 55, and my DD is only 31. It sounds like this deed would make her owner, with us as tenants.

[CCL]

If you only have one or two children a life estate deed may very a simple matter.

IME, though, it was more trouble than it was worth. My mom had a life estate deed for one of my brothers. Her thinking was that he'd always have a place to live. Who was gonna maintain the place? Who was gonna pay the taxes and insurance? What if he got behind on utilities? What about the girlfriend who lived there, too? After about a year, the rest of us said the hell with it and just gave him the house.

[Mardi Gras Audrey]

Definitely would talk to a lawyer. Everything can very different based on the state.

My sister died while a Texas resident. She had properties in Texas, New Mexico, and California. She had a will only. My parents had to do probate in Texas and California (started in Texas and then took the paperwork from the Texas court to ca court to do). The Texas probate cost like $2k and that was for all the lawyer fees and the court time. The probate in ca was like $12k? Because it was based on the appraised value of the property (and doesn’t matter if there is a mortgage). A lawyer had to hired and it was pricey. The Texas lawyer advised not bother with New Mexico (property there was pretty worthless and it had tax liens).

It was interesting seeing the difference in state costs and processes. While waiting for probate, all sis’ bank accounts were frozen so parents and I were cash flowing until probate could be done. Texas took like 2 months to get a hearing to get the paperwork for dad to be the executor. CA was much longer

[Bonny]

May 20, 2022 11:57:21 GMT -5 Happy prose said:

swamp Thank you. I will for sure be using a lawyer, but I just looked up life estate deed, and sounds interesting. I'm wondering if the retirement park/community will allow it, or if they have no say in the deed. One of the rules is you have to be 55, and my DD is only 31. It sounds like this deed would make her owner, with us as tenants.

You will need to read the rules carefully. Most of them require that a person 55 and older reside in the unit which would allow your DD to rent out the property until she becomes eligible to move in herself if she wants. You should also check to see if rentals are allowable as well. In any case a retirement community would allow her to sell it if she isn't eligible to live there. They can't confiscate your property.

[Deleted]

There have been a couple of items reported on local news about life estates Both cases involved adult children granting a parent a life estate, but becoming unhappy with the parent having someone live with them. One story was a man who remarried and tried to move his new wife into the house; the other was a woman who wanted to live with her same-sex partner. I think anyone entering into a life estate situation should think about the future, even if they have no current plans for a future relationship. Love happens.