My mother owns a home in Milwaukie, OR, county of Clackamas,

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My mother owns a home in Milwaukie, OR, county of Clackamas, which is worth about $290,000. Her entire estate is currently about $600,000 to $700,000 including that house. She asked me about putting the house in my sister's name to avoid probate. I told her that first of all that would cause a tax event for my sister (either at the time it's put in her name (or our 3 names if she did that) or at her death, plus complications for me and my brother since the house, upon her death would go to all three of us, plus my sister wouldn't have the money to pay our 2/3 (my brother and me). Since there would be not tax event upon her death tranferring the home to my sister's name now would only complicate things and would cost money that would otherwise be avoided. Am I correct? Could you give me details to satisfy her concerns? Thanks.

Customer (name blocked for privacy)

Status: Closed Value: $15

I agree with you that transferring the house to one sibling now would cause enormous potential problems in the future. You have identified some of them. I am not sure, however, that a transfer of a home to a child would be a taxable event as some states exclude from transfer tax, transfers between parents and children. You can call the recorder of deeds in the county in which the house is located (call the courthouse to get to the deed recorder) and they will likely tell you if it would be taxed or not. But even if not taxable now to your sister now, the value of your mom's estate could vary tremendously by the time of her death. If she becomes infirmed and needs nursing home care, and lives a long time, that money can easily go out the winder at $70,000 plus a year (and that is at today's rates.) Also, whatever you mom has her liquid monies invested in could change in value. (If it is in CDs it is most safe, but if it is in stocks and bonds, anything could happen.) So, should your mother die with little more than that house, you and your other sibling would be totally out of any inheritence. By the way, it is not correct that your sister would have to pay you and your other sibling out a share when your mother dies. If your mother transfers the house to her, it is 100% hers, period, no stop! Then there are emotional issues: You mom begins not to like your sister...she can't take back the transfer...your sister doesn't like your mom..she can kick her out of the house...and the split it is already causeing with you and your sibling and your sister. Most people don't realize that that the "cost" of probate is not all that much. To find out how much it would be in your state, go to the part of the court where they handle probate. They will tell you what the probate charges would be for an estate worth about 1 million (house plus cash.) While it will be something....it usually isn't all that much and will certainly not be worth all the problems the transfer could cause.

Nancy, Esq.
Pennslyvania Attorney

Reply to Nancy Akbari's Post: My mothers intent, she told me, was to have our sister pay the money difference at her death, she's currently 90 years old. I told her that it would be a tax event as she'd be transferring title to a $290,000 home to her, I can't see how that would not be a tax event since she could only pass along $20,000 as a gift to each child each year and that would be clearly much more than that. I told her that nothing would show to the courts that that was her intent and that she could put the house in all our names just as easily. She thought that would be a problem for her if she wanted to sell the house and any one of us didn't want her to sell it. I agree with that but why do it at all since there would be no tax in Oregon on an estate of that size (about $700,000 including the house). Does all that ring true? Thanks.

Bill Callen

Bill: You are right that the property would pass tax free to the heirs upon death (taxes may still be payable to your state.) But regarding a transfer while alive, while normally there would be a transfer tax, both at the state and local level, some states have a special exemption from this rule and allow transfers between parents and children (as well as in some other instances, not relevant to you) to be made tax free. So just ask at the recorded of deeds at your local courthouse if your state and locality does or does not tax a transfer between a mother and child. And don't forget to bring to your mother's attention, all the other problems this transfer would raise. And you are right that there would be nothing in writing requiring your sister to pay you out. I suppose your sister could enter into a contract with your mother and you and your other sibling, agreeing, that upon your mother's death, she would pay you such that with her having received the house she will pay you two the monies necessary such that each of you would have received equal monies had the house been included in your mother's estate (which would be valued at the date of your mother's death.) But that involves again lawyer, expense and possible litigation. Probate is not that expensive. Find out how much from the clerk in the part of the court that probates wills so you can give your mother a concrete figure. It is usually a tiny percentage of the estimated value of the estate. Whatever, I am so sure it will be less than all the expense and emotional problems (which you cannot put a price on) which will be cause should your mother go ahead with her idea. And by the way, do you think your mother is competent? Is this sister unduly influencing her? The idea is so poor, that I question both of the above.

Nancy, Esq.
Pennslyvania Attorney

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putting a home in daughter's name to avoid probate.

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