Legal Question in Wills and Trusts in New Jersey
tax liability for mother and daughter on house
My mom is buying a house. She is 84 and in good health. She would like to put my sister's name on the deed in the event that anything happen she can sell the house. There are six children and the money would be divided equally. (a 7th brother died and she is leaving a specific sum for his children). Would my sister (who is also executor of the will) encounter tax liabilities because her name is on the deed? Because of her age she would like to co-own the house with my sister (even though my mom buying it), just to make it easier when she dies. Any suggestion is greatly appreciated.
2 Answers from Attorneys
Re: tax liability for mother and daughter on house
Sounds like a bad idea to me. What is going to make your sister divide the proceeds equally? what if she mortgages the house or if her creditors put a lien on it?
Avoiding probate is not an issue in NJ so having the sister on the deed really does not help. If the house needs to be sold for some reason, this could be done using a power of attorney.
Re: tax liability for mother and daughter on house
Since there would be no requirement for your sister to do the right thing (divide the proceeds on sale among the siblings), unless the Deed specified that she be required to do that, my suggestion is to have your mother create a living trust (one created during her lifetime) and take title in the name of the trust. When she passes away, the trust will own the house and the trust document can specify what happens with the house when your mother passes away. The trust will be revocable, so your mother can change the terms at any time during her lifetime. This could also provide some flexibility on who gets the funds in the event one of the siblings has a lien against them for anything. I could assist you in this regard in preparing the document and also in the closing, if you needed an attorney to assist your mother. I am assuming your mother is paying all cash for the house and not taking a mortgage. If she is taking a mortgage, she will have to personally guaranty it along with the trustees of her trust. Any questions, contact me at your convenience. The trust will avoid probate and can also be used for mom's estate planning if needed.
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