Tag Archives: Inheriting Real Estate

Marriage and Real Estate

5 Feb

MetroBoston Publication Date February 5, 2013
By Attorney George Warshaw

State law provides married couples a special form of home ownership protection. It’s referred to as a “tenancy by the entirety.” It’s like a joint tenancy but for married couples.

It’s created by simply stating in the deed, “I grant to Dick and Jane, husband and wife (or being a married couple), as tenants by the entirety, the following property . . . .”

What’s special about it?

Real estate acquired under the heading “tenants by the entirety” is similar to a joint tenancy in one sense: if one person dies the other inherits it automatically. A probate court is not required to pass title to the survivor.

Marital property held this way has two special features: first, a creditor of only one spouse cannot seize and sell the marital home so long as it is the principal residence of the other spouse; and second, neither spouse can eliminate the right of the other to inherit the property by merely giving a deed to a child or an outsider.  

There are several exceptions that may make a visit to a lawyer worthwhile. If you acquired your martial home before February 11, 1980 or were originally deeded your home as joint tenants or tenants in common, consult a real estate lawyer to upgrade your ownership. © 2013 George Warshaw.

George Warshaw is a well-known attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions. Contact him at metro@warshawlaw.com.

 

 

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Owing Real Estate as Joint Tenants

31 Jan

MetroBoston Publication Date January 31, 2013
By Attorney George Warshaw

Two or more people can own real estate together in several ways. One of the most common is as “joint tenants with rights of survivorship.”

A joint tenancy is a form of ownership by which a person’s ownership rights in property pass to one’s co-owners upon death.

Ordinarily, when a person dies the heirs must go through the probate court to obtain certification of an inheritance of real estate. Property owned or held as “joint tenants” avoids probate because the property transfer is automatic upon death.

Simply file the death certificate with the Registry of Deeds and the transfer of legal ownership become complete and noted in the official records. Nothing more is necessary to effectuate the transfer of title ownership.

A joint tenancy in real property is established by the initial words of transfer used in the deed. “I grant to Fred and Wilma Flintstone the following property as joint tenants with the right of survivorship . . . .” is how it is typically phrased.

Can one joint tenant deed his or her interest without the consent of the others? Yes. One joint tenant always has the right to transfer his or her ownership interest without the permission of the other – but the automatic inheritance right is usually lost upon the transfer. © 2013 George Warshaw.

George Warshaw is a well-known attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions. Contact him at metro@warshawlaw.com.

 

 

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Should You Add Your Name to Mom or Dad’s Deed?

25 Jan

MetroBoston Publication Date January 24, 2013
By Attorney George Warshaw

Last week we briefly discussed the tax benefits and perils of gifting real estate. One thing that most people do not consider as a gift is when a child’s name is added to a parent’s deed.

Usually a child is added to a deed to make inheritance easier or to help manage the parent’s property.  Adding one’s name to a deed can have unintended tax consequences. It is often considered a gift under the tax code!

If it is considered a gift, then the person receiving the gift receives along with it the same tax basis that the parent had in the property.

If a house is worth $500,000 and a child is added to a parent’s deed as a joint tenant with rights of survivorship, the child usually receives a gift of a portion of the parent’s ownership interest – typically a half-interest.

Keep in mind this basic estate planning rule when transferring any interest in property: a person inherits property at its fair market value; a person receives a gift of property at the same tax basis (i.e. cost + improvements) as the giver has in the property.

Check with your tax accountant, adviser or lawyer before adding someone onto a deed. The foregoing may not apply to you. © 2013 George Warshaw.

George Warshaw is a well-known attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions. Contact him at metro@warshawlaw.com.

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Is it Better to Give than Receive?

17 Jan

MetroBoston Publication Date January 17, 2013
By Attorney George Warshaw

When families get together over the holidays talk often turns to inheriting mom or dad’s house or estate.

Is it better to receive a gift of real estate today or inherit it later? Tax wise, a gift isn’t always the best choice.

When a person dies one’s real estate has to be valued. Let’s say the present market value of the house is $500,000, but mom or dad only paid $100,000 for it.

Give it to your children while you are alive and they are considered to have acquired it at the same price you (mom and dad) paid plus any improvements.

A person who receives a gift steps into the shoes of the giver. If your children acquire the property by gift at the same price or tax basis as mom and dad paid ($100,000) and sell it later for $500,000, they’ve made a profit of $400,000.

If your children inherit it later, on the other hand, the tax law treats it as if your children bought it at its fair market value. Inherit it at $500,000, sell it at $500,000 and they technically made no profit.

Always consult your tax advisor or attorney before gifting real estate. It’s a complicated subject. The above information may not apply you. © 2013 George Warshaw.

George Warshaw is a well-known attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions. Contact him at metro@warshawlaw.com.

 

 

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Medicaid – The 5 Year Lookback Rule

13 Apr

Metro®Boston, Publication Date: April 11, 2012
By Attorney George Warshaw

Last in a Medicaid series

I’ve never met anyone who would rather give his or her money to the government than leave it for one’s children, heirs or charity. The government never has as well.

To combat the natural inclination of giving away one’s money and property to qualify for free nursing home care, Medicaid, like in hockey, has a penalty box.

If you impermissibly give away your assets in Medicaid’s eyes, the whistle blows, you are disqualified from further play and placed in the penalty box.

The penalty? Medicaid takes the value of your gift and divides it by the average monthly cost of nursing home care. The result is the number of months you must sit in the penalty box before you can apply again.

There is a safe harbor though, as lawyers like to say, where you can permissibly make a gift and avoid the penalty box: make that gift more than 5 years before you apply for Medicaid and your gift is usually safe.

Your gift is then no longer a countable asset on the government’s list of assets that you must sell and spend before you can qualify for care.

Be careful! Always consult an Elder Care Attorney for your particular Medicaid situation. © George Warshaw 2012.

Read the Medicaid series at www.GeorgeintheMetro.com

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com.

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Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

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Important Changes to Probate Law May Affect Your Will

20 Jan

Metro®Boston, Publication Date: January 18, 2012
By Attorney George Warshaw

Charles Dickens is now safely buried.

Remnants of ancient England that ruled our probate procedures in Massachusetts will be gone in a few months. Beginning this April, the Massachusetts version of the Uniform Probate Code will become the law.

And with it, a new informal procedure will allow one’s heirs to probate a simple estate in a speedy process.

Under the new law, a person filing a will now has a choice: utilize a formal process in which a judge oversees the probate or elect an informal process that lets court clerks, designated as Magistrates, approve the will or a petition where there is no will.

While certain types of estates must go before a judge, most are straight-forward, uncontested and are perfect for the new informal process.

The new law also changed many of the rules regarding wills and inheritance.

For example, the rule in Massachusetts that marriage revoked a will made prior to the ceremony unless the will directed otherwise has been changed, among other important revisions.

So don’t take chances. It makes good sense to review and update your will before the new law goes into effect.

And if you don’t have a will, well you can guess my advice!

© 2012 George Warshaw
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George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com.

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Where is Grandma’s Will?

11 Jan

Metro®Boston, Publication Date: January 4, 2012
By Attorney George Warshaw

Over family gatherings during the holidays, the topic often turns to one’s parent’s or grandparent’s will.

“It’s in the safe deposit  box, I think.”

“It’s in her sock drawer with her old letters from Dad.”

“It’s not where I saw it last. OMG! Maybe the lawyer has it?”

While a safe deposit box seems like a good idea to put the will, if your name isn’t on the box you will need authority from a court to open the box.

There’s another place you can store a will that is cheap and easy.

Try the Registry of Probate. The fee varies with the county but it’s not a lot.

In our office, we hold the original will for 12 months in case someone wants to make any changes or updates. We then file the will with the Probate Court.

Since most changes or corrections are made in the first year, it’s not likely to change for several years and the will can be easily retrieved for updating.

If the person later dies, the Probate Court checks its storage records when an estate is later filed.

So if you want to find it when you need it, consider using the Probate Court instead of a safe deposit box or Grandma’s sock drawer!

© 2011 George Warshaw.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship.

Before making any legal decision, consult an attorney to see how the foregoing may apply to your circumstances.

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Real Estate for Christmas

30 Nov

By Attorney George Warshaw

It’s Christmas and Hanukkah time. Naturally one’s thoughts turn to gifts.

As families get together, oftentimes the discussion shifts to a parent’s home. Is it better to gift it now or inherit it later?

While the answer requires a careful discussion with a tax advisor, it’s helpful to review a key gifting rule.

When a person receives a gift of real estate, the gift is valued for tax purposes at the same cost+ value (or “tax basis” in accountant-speak) as the giver has in it.

Bought a home years ago for $200,000, put $50,000 in improvements into it, and your tax basis is likely $250,000.

Give it to your kids today and the IRS will likely value the gift as worth $250,000. It doesn’t matter if the house is worth $1,000,000, the gifting value is still $250,000.

If your kids later sell it for a million, the IRS deems they made a profit of $750,000 (sale price minus tax basis) – and they may have to pay a tax on the $750,000 gain at the time of sale. That’s painful!

Next week: Is it better to Inherit Real Estate?

Always consult your tax advisor or attorney before gifting real estate. The foregoing is not intended as legal advice. Only an in person consultation with an attorney can establish an attorney-client relationship. © 2011 George Warshaw.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.

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Cash Now or Inherit Later?

30 Apr

Metro® Boston, Publication Date: March 9, 2011

By Attorney George Warshaw 

What would you do? 

An elderly parent owns several rental properties. He offers to sell these investments and give you your inheritance now. You could, of course, decline and simply inherit it several years from now. 

Most people, I suspect, would take the cash now – but they might be short changing themselves. Here’s why. 

Let’s say your parent sells an investment property and has to pay a capital gains tax of $100,000 on the profits realized. If you were to inherit the property instead, you might have saved the $100,000. 

When a person inherits real estate, he or she acquires it at its fair market value. Sell it at the same value and you haven’t made a profit in the eyes of the IRS. For example, if a property is worth a million when you inherit it and then you sell it at the same amount, you haven’t made a profit. You make a profit only if you sell it for more.

Be careful though: if your parent’s estate is large enough to be subject to a federal or state estate tax, it might be better to take the money today. Consult a tax accountant or attorney for your situation. © 2011 George Warshaw.

The foregoing is not intended as legal advice. Consult an attorney to see how or if the foregoing applies to you.

Attorney George Warshaw represents buyers and sellers of homes, condos and investment properties, prepares wills and trusts for inheriting real estate, and trusts that protect your children and pets. George welcomes new clients and questions at  george.warshaw@warshawlaw.com.

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Should You Gift Real Estate?

30 Apr

Metro® Boston, Publication Date: January 12, 2011 

 By Attorney George Warshaw 

Is it better to receive a gift of real estate or inherit it later? Tax wise, a gift isn’t always the best choice for the recipient. 

When a person dies one’s real estate has to be valued. Let’s say the present market value of the house is $500,000, but you, the homeowner, only paid $100,000.

Give it to your children while you are alive and they later sell it for $500,000: they may have to pay a capital gains tax on $400,000 of profit. But if they inherit and sell it for $500,000, no tax or a lesser tax may be due.

 Here’s why:

 A person who receives a gift steps into the shoes of the giver. The recipient acquires the property at the same cost or tax basis as the person who gave it, i.e. $100,000. Sell it for $500,000 and you’ve made a profit. If you inherit property, you instead acquire it at its fair market value, i.e., the same as if you paid $500,000 for it. Sell it for $500,000 and you’ve sold it for the same amount that you acquired it.

 The above information may not apply you. Always consult your tax advisor or attorney before gifting real estate. There are numerous opportunities available to owners of real estate. © 2011 George Warshaw.

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Caution. The foregoing is not intended as legal advice. Laws, and court decisions interpreting them, change frequently. This post is not updated. If you have a legal question, only an actual consultation with an attorney who has an opportunity to review all the facts can provide an answer that applies to your situation.

Attorney George Warshaw represents buyers and sellers of homes, condos and investment properties and prepares wills and trusts for inheriting real estate. George welcomes new clients and questions at  george.warshaw@warshawlaw.com.

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Gifting Your Home to Your Children

30 Apr

 Metro® Boston, Publication Date: January 5, 2011

 By Attorney George Warshaw

 It’s not unusual for parents to gift their home to their children and expect to live in it afterwards; but we’ve all heard stories – all too real – about how someone’s parents were later forced to move.

How can something so simple go so badly?

Suppose you (the parent) deed your home to your son as a gift. He gets a mortgage but can’t pay it; or, your son’s creditors place a lien against all real estate standing in his name; or, your son gets divorced and now your home is one of his assets before a probate judge.

How can you protect your home? A trust is perhaps the best method, but a life estate may work almost as well.

It works like this: In the deed to your son or daughter you, the parent, simply reserve the right to live in the house the rest of your life (i.e. called a “life estate”). While your son’s creditors may still acquire a lien, the lien is subject to your right to live in the house forever. If your son wants a mortgage, your permission is needed – and, if you take my advice – be smart, don’t give it! If you do give it, you will likely be evicted in the event of a foreclosure. © 2011 George Warshaw.

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Caution. The foregoing is not intended as legal advice. Laws, and court decisions interpreting them, change frequently. This post is not updated. If you have a legal question, only an actual consultation with an attorney who has an opportunity to review all the facts can provide an answer that applies to your situation.

Attorney George Warshaw represents buyers and sellers of homes, condos and investment properties and prepares wills and trusts for inheriting real estate. George welcomes new clients and questions at  george.warshaw@warshawlaw.com.

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