Legal Question in Bankruptcy in West Virginia

Re: bankruptcy law

I assume you intend to make a gift of the real estate. Also, assuming there is no lien, then your gift would be an asset that the recipient would have to schedule and claim as an asset. The value would be 1/2 of the fair market value less 1/2 of the value of the life estate. The life estate value is computed by a statutory formula. If a person file a bankruptcy, such an asset would have to be disclosed and exempted. The current exemption in W. Va. could be as much as $25,400.00 if the filer did not have any other real estate or other assets other than an automobile and household goods. If there were an existing lien because of a deed of trust, that debt would be subtracted first before subtracting the life estate to determine the value of the interest conveyed to the daughters. There are several other considerations you should consider prior to such a move. They include cost basis for capital gain purposes, the look back window that Medicaid imposes on transfers, any "due on sale" clause in a mortgage agreement. One should consult a lawyer to place such a transfer as part of comprehensive estate and tax planning.