Helping Out Mom
My mother is 65 years old and is having a difficult time making ends meet. Our family (5 people) has decided to help her out by paying her monthly mortgage. I decided to open a bank account where once a year each person could contribute their share with an automatic payment process in place to make the monthly mortgage payment.
My mothers only real asset is her home with only about $50,000 in equity and her car. She does not have a will or trust.
The five individuals who will be helping in the mortgage thought is would be a good idea for one of us to place our name on the deed of the home so if something were to happen to mom it would prevent probate issues.
In essence, we would like to repay any amount of money folks have contributed to moms mortgage in the event she passes away. My mom would like any remainder of her assets to be distributed among her seven children.
Is there any advice that can be given in regards to the best way to handle this and prevent any undue taxes ect?
Transferring the house may or may not get you out of probate. However, a well-drafted will should avoid probate.
Transferring a property before her death is not a good move tax-wise. If you inheirit the property, any pre-death appreciation will not be taxed on a later sale. However, any appreciation on a gift will be taxed at a later sale.
Probate is governed by your state law. If your mother dies without a will, probate is a near certainty.
Adding one of you to the title with right of survivorship would bypass probate, but create an unfavorable capital gains tax issue for the added individual when the property is sold.
Might be better to have your mother draw up a will that defines how her estate is to be distibuted.
A living trust might also help here. The property could be titled into a revocable trust. One of the family member could act as trustee, manage the family member contributions, disbursements from the trust account, and provide an appropriate accounting to all concerned. The trust could designate all the children as beneficiaries in equal shares after your mother passes on.
Consult your estate planning attorney for specific guidance.