Question: After my mom’s recent death, my father decided to sell their home and move in with my family and me. He will build an addition with the proceeds from his sale. Should we add him to our deed? What other concerns should we have?
Answer: If you received permission from your wife, the most important preparation has occurred. Further details will fall into place with proper planning. Sit down with your father to address the following topics:
Protect your father’s investment in the home. Even in tight knit families, parents are concerned for their autonomy and independence. Your father likely wants assurance that his ownership of the home will be greater than a mere tenancy. In consideration for his investment and its resulting improvement of the home’s market value, your father should either be added to your deed, or given secured interest in the home through a mortgage. If you add him to your deed, research and confirm he has no federal tax liens unpaid. These liens will attach to your home despite being a several years old. If your father is elderly or in poor health, consider simply granting him mortgage rights without payment terms, in order to avoid potential Medicaid liens for long term nursing home care.
Address management issues. Along with ownership, comes responsibility for expenses. Discuss anticipated expenses along with surprise expenditures like major property damage. If you keep your father off your deed, he will lack power and control over the property. Devise a plan for decision-making relative to costs that affect the entire home.
Consider estate planning. Specifically, consider who owns the property after your father, or any remaining owner dies. Typically, these arrangements call for a “last person standing” mindset. It is likely that you and your spouse share a tenancy by the entirety. This means upon the death of the first spouse, property rights transfer immediately to the surviving spouse. Adding your father to the deed will require a decision to establish a similar type of group ownership. Perhaps, if your father kept his previous home, he would have passed it on to all of his children equally. By rolling his sale proceeds into your home, his assets become blended with yours, creating complexities. Discuss how a will or trust can solve these problems by anticipating such problems and providing solutions. Many other concerns remain, like your current mortgage, homeowners and title insurance coverage as well as tax matters. Use an attorney to devise and carry out your plans.
Attorney James Haroutunian practices estate planning and real estate law in Billerica at 790 Boston Road. Contact him to begin an estate plan or with questions at 978-671-0711, hlawoffice.com, or email him at email@example.com.