Legal Question in Wills and Trusts in Minnesota

Re: House title transfer

Thank you for your question regarding transferring your father-in-law's home. I'm sorry to hear about his loss.

You asked a number of questions about transferring ownership of the property to your father and his three children. First, you may need to probate his wife's estate. Under Minnesota law, an estate must go through the probate process if it includes real estate or at least $20,000 in assets. However, if your in-laws owned the house jointly (but not as tenants in common), it is not a probate asset.

Second, you asked about ownership interests and responsibilities regarding taxes and expenses related to the property. Multiple ownership of property can cause a number of problems, several of which you have already mentioned. Legally, each owner is obligated for his or her share of taxes, expenses, etc. However, unless there is some sort of trust or ownership agreement, each person's share is his or her own personal asset which can be lost if that person is sued, receives Medical Assistance, files bankruptcy, or gets divorced.

You also asked about income tax. If the property produces income for the owner, that income does have to be reported. Additionally, there might be some estate or gift tax issues, but I need to know more to give you any help with such questions.

Please feel free to give me a call. I think your family would benefit from some estate planning guidance.

Regards,

Luke Robinson

Chesley, Kroon, Chambers

Harvey & Carpenter, P.L.L.P.

P.O. Box 327

75 Teton Lane

Mankato, MN 56002

Re: House title transfer

I'll try to take your questions one at a time.

1. Yes, although I would expect that your father in law would continue to pay these items voluntarily if he could.

2. Creditors would only be entitled to the 25% owned by the debtor, which probably would be worthless to most creditors. The 25% belonging to your father-in-law would be exempt from most debts as his homestead.

3. There are several tax issues. Up front is the question of whether Father-in-Law is obligated to file a gift tax return and/or pay a gift tax. The tax is unlikely, but the obligation to file a return might be there. For the recipients of the house, there's no income tax right away but they have to think about capital gains when they sell their interest. Capital gains might be less or none if they waited and inherited the house in the usualy way after Father-in-Law's death.

Your questions are thoughtful; and in case you haven't figured it out yet, your Fahter-in-Law's idea is not necessarily a good one. He should probably do the following:

1. Make sure he has his wife's name cleared from the title and that the house is now in his name alone. You'd be surprised how many people never get this done. I have clients now for whom I am probating two estates, where it should only have been necessary to probate one if things had been handled better to begin with.

2. Do a will and provide there who gets his house.

3. Lighten up and enjoy the rest of his life. It's impossible to plan for all contingencies.

This response is for general information purposes only and does not create an attorney-client relationship. Consult the attorney of your choice concernng the details of your case.