Q: My father-in-law owns property with his sister. He lives on the property but she doesn’t. They each own an equal share of the property, but he now can’t afford to pay the expenses.
He wants to quitclaim his half of the property to me and my wife and I’ll take over his property taxes plus pay all past due taxes. Do I need a lawyer to help fill out the forms or is this something we can do ourselves? Also, I should tell you that the property is mortgage free.
A: You certainly can try to do it yourself, but you would probably be wise to talk with a real estate attorney to know what you are getting into. While paying past due real estate taxes might sound simple, in some cases it can be cumbersome.
Also, if your father-in-law has paid all the expenses on the property and has lived there, does his sister still want to own her share of the property?
If she dies, her share of the property will go to whomever she has listed in her will. If you or your wife are listed as the heirs to her share of the property, that will help. But if you are not named the heir of the property and there are other siblings or relatives, you should know that you may be setting yourself for a big problem by taking over your father’s share of the property.
You should sit down with your father-in-law and his sister to discuss the property and what they really want to do with it. There are other ways to handle this situation other than with a quit claim deed.
If your father-in-law still wants to or needs to live on the property, you may want to help him with his expenses or even loan him money for the payment of those expenses. He and his sister can then give you a mortgage in return for the loan.
You would protect your money and your father-in-law could continue to live on the property.
In many states if you own the property and live there as your primary residence, you get substantial tax benefits, such as the homestead exemption. You might lose these benefits if your father is no longer on title.
Furthermore, if you take title of the property now by a quitclaim deed, your father-in-law would effectively be gifting you the property prior to his death. The value of the gift would be your father-in-law’s share of the value of the property when he purchased it plus any improvements made on the property.
If the property has appreciated in value substantially, you will end up paying taxes on the appreciation. If you and your wife were to inherit his share of the property, you would inherit the property at its value at the time of your father-in-law’s death.
There is more to your question than just the transfer of the title to you. There are tax consequences and estate planning issues you should consider. The best thing you can do is to consult with an estate attorney or real estate attorney who can help you think through these issues and decide what course of action to take.
Oct. 19, 2007.