Legal Question in Wills and Trusts in Minnesota
Changing Home Title and Passing on To Son
My parents would like to give their home to one of their sons and for this proposed scenario, all parties involved are fine with this. Is it legal/possible to put the name of the home in just one of the parents names (currently it is in both names with Rights of Survivorship). One parent is terminally ill and this is the name of the parent the house would go into and then this parent would put it in their will that they would like to house passed onto the named son. The son currently lives in the home (& is over 21 years old) and will continue to live in the home and also allow the father to continue to live in the home. The goal is to protect the home in case of future medical needs of the father (currently not forseen at this time). I am aware of the 3 year look back rule, but other than that, is this a legal option and if so, will the tax basis for the home be the current value at the time of passing it on via a will or will it be the original price paid by the parents? Is this a viable option? Any forseen problems legally with doing this?
Thank you for your help!
1 Answer from Attorneys
Re: Changing Home Title and Passing on To Son
You really need to consult face to face with a lawyer about this. There is WAY too much to it to be dealing with it on line like this.
That said, here's what I'd say off the top of my head. If the house is joint, a transfer to Dad when Mom dies is a snap. There's not much use bothering with a deed from Mom to Dad at this time. If Mom and Dad don't have wills, I would get them done right away and put the provisions in about who the house goes to after neither of them are on the planet.
An immediate transfer right now to the son would mess up the capital gains situation. He would take the basis the parents have, which surely would be a bad deal. Wait to inherit it and probably there will be a stepped up basis. I say probably because there may be a repeal of the stepped up basis in the works. Seems to me it's already passed and going into effect in 2011 if not repealed, and they are talking about repealing it.
But this is why I say you must see a lawyer, because I would have to research the basis thing to be sure what the future holds for it.
If it might be about to disappear for example, maybe you should do the oposite of what you contemplate; transfer to Mom and have he will it to son.
My understanding about the three year rule: There's no medicaid lein as long as a child lives in the house and it can be shown that the presence of the child has delayed the need for long term care - letter from a physician required which says that.
Consult with a lawyer who knows this stuff. Good luck.
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