Transfer of Home Upon Death

[Min Kim]

Hey everyone,

My parents have currently been in their current home for about 15 years and with my dads health declining, they are concern what will happen to the house. It’s currently only under his name.

He wants the house to go to me so that I can take care of the home due to the language barrier my mom would have with dealing with any paperworks. He has put it in his will that the house transfer over to me.

Question is, will there be any problems that we could run into? Should we do anything else so that the transfer goes over smoothly?

Thanks in advance!

[Bruce Lynn]

Probably easier ways to accomplish this.....may or may not reduce risk of having your wishes accomplished.

[Min Kim]

@Bruce Lynn what else would you recommend?

[Bill B.]

Under the Washington Uniform Real Property Transfer on Death Act (RCW 64.80.010, if you're curious), the owner of property can create a TOD deed, which transfers the property upon the owner's death.

[Min Kim]

@Bill Brandt I want to say that’s what he did? I believe he went to legal on base and that’s what he filled out. Then he had to file it with the city?

That being said, what’s the process after the TOD takes in affect? Do I have to be approved and obtain a new loan for the remainder of the mortgage that’s owed?

[Bill B.]

A bank CAN call a loan due when the current payer dies, they USUALLY don’t. it’s bad press. As long as payments are being made on time  

This transfer on death is automatically, I set one up for my mom to avoid probate which can be lengthy and expensive, without making the horrible mistake that so many seniors make putting their children on the title before their death. (Thereby owing capital gains taxes when they sell instead of getting a stepped up basis. )

Ps. This procedure is completely reversible and changeable until the current owner dies. 

[Alan Grobmeier]

@Min Kim, another way to go about it is to have your parents create a Trust.  In any event, do not have your name put on the title until after they pass away.  To do so will give you their acquisition price for taxes.  

You need an attorney.  Now.

[Lynnette E.]

A Trust would be the better process.  It would also protect your mother best. The house could be owned by the Trust, you manage the Trust and the Trust could have your mother as the beneficiary.  You could be the beneficiary after your mother passes.  That would ensure that your mother has use of the house for her lifetime.  If you inherit it and are involved in a legal issue (car accident, anything like that) then the house could be an asset that is seized to pay a debt, especially since it is not your home/residence.  

The Trust also will let you get the updated basis when your father passes.

Check with your state to see if a spouse has a mandatory minimum to inherit and make sure there are assets for your mother to meet that requirement.

And if you re using  TOD deed make sure you can get title insurance for that type of deed.  In CA the process to get title insurance is crazy for that type of deed.  Basically you have to do a mini probate, then have all potential heirs sign a 'no objection' letter and THEN you have to sign to pay all costs the title insurance agency may have now and forever in the future if there is litigation.  So really you are the insurer, not the insurance company.

[Min Kim]

@Bill Brandt so it’s best not to put my name on the current loan? What are the neg and pos of doing that?

I really appreciate the information you’ve provided

[Min Kim]

@Lynnette E. My parents don’t want to go with the trust route. My father believes that a TOD should suffice?

Essentially, I would take over the payments. my mother wouldn’t want to live in the home all herself and would want to live in a smaller home. I would renovate and begin renting out the home and whatever profits come from the rent, would go to her.

Are there any flaws to this plan?

[Lynnette E.]

Originally posted by @Min Kim:

@Lynnette E. My parents don’t want to go with the trust route. My father believes that a TOD should suffice?

Essentially, I would take over the payments. my mother wouldn’t want to live in the home all herself and would want to live in a smaller home. I would renovate and begin renting out the home and whatever profits come from the rent, would go to her.

Are there any flaws to this plan?

 Your mom still does not have any protection.  Say you get married and you pass away, then your husband would get the property and your mom is left with nothing.  Or you could loose it in a lawsuit.

Your dad really should discuss with an attorney how to protect the asset so your mother has use of the money it generates, or the asset itself.

[Bill B.]

There’s no positive to adding yourself to the loan. Huge negatives to adding yourself to the title. 

IMHO there’s no need for the trust as long as your mother is fine with you inheriting the house. If WA is a community property state she may have a vested interest in the property and need to sign off on the transfer.

[Min Kim]

@Lynnette E. Thank you for the input!

[Min Kim]

@Bill Brandt good to know about not adding my name!

In the end, after 20+ years, the house is going to my brother and I. We’re just doing it sooner rather than later.

Appreciate your time sir!