Straighten Out Home Ownership For Children

Q: I am in my 60s. My son and grandson are disabled with psychomotor retardation.
 

I found a home to live in with them and my sister offered to loan me the money to buy the home. Listed on the deed are my name, my son’s name, my grandson’s name, my sister and brother-in-law’s names and my other son’s name.

I would like the home for my boys after I am gone. But there are so many people on the title and since I only own one-sixth of the home, I have only a small homeowners’ exemption.

I would like to clean up the ownership situation. I am paying off the loan as fast as I can. I don’t want the boys to suffer because I didn’t do things right. What should I do?

A: First, you need to sit down with an estate planning attorney to help you with an estate plan. You need to plan for your future and for your children and grandchild.

Your son and grandson clearly need assistance, both medically and financially, and you need to decide now how to provide for them in the future when you are no longer able to.

In addition to having a will to decide who will get your assets when you die, you will need a power of attorney for health care to allow people to help you out in case you are unable to make medical decisions about your own care.

You also need a power of attorney for financial matters. Appoint someone who can make financial decisions for you in case you are not able to. You also need to determine who will distribute your assets when you die. You will need to appoint an executor of your will, who can carry out your wishes.

Once you have made these decisions, you will need to decide whether your home will be the best place for your boys if you are no longer able to care for them. If they are able to stay in the home, you need title to the home to be held in a manner that will permit them to keep the home in there names. Your estate planner or estate attorney may suggest having the home placed in a trust that will be in your name while you are alive and upon your death, the trust would continue to hold the property for the benefit of your boys.

From the situation you’ve described in your letter, it would appear that the home should probably be in your name alone or in the name of your trust. Your sister can have a mortgage on the home, which you will pay off over time. As the sole owner of the house, you would then be able to get the full homestead exemption for the property.

Right now, the title is a mess. If something should happen to you unexpectedly, your children and grandchildren would suffer from this.

If title is in held by your trust, you will benefit from the home while you are living and upon your death the home would be held for the boys’ benefit. If the home becomes a burden on the boys, the home could be sold and the money left in the trust would and should be used for the boys’ daily expenses and their needs. Any other assets you have could be transferred to the boys or held in the trust also to be used for the boys’ benefit.

Initially, you should be the trustee of your own trust, but you will need to pick a successor trustee. If for some reason you can’t serve as trustee (either because you are ill or die), the successor trustee would take over.

You should choose somebody that cares about the boys and is willing to take the time to make sure any money is invested wisely and any income that comes from the investments is used for them.

Paying down the loan on the home as quickly as possible is a good idea and will hopefully give your boys a safety net going forward.

While the many issues you face are quite complicated, sitting down with a good estate planner should help you figure out what legal and financial options are available to you and how you can best achieve your goals.

Samuel J. Tamkin is a Chicago-based real estate attorney. Ilyce R. Glink’s latest book is 50 Simple Steps You Can Take To Sell Your Home Faster and For More Money In Any Market. If you have questions for them, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022 or contact them through Ilyce’s website www.thinkglink.com