Can I inherit money from sale of house without ever being on the deed (funds, pay)
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Our situation:
Mom is in her mid 70s.
Current will states my sister and I will evenly split any money left in mom's IRA and annuities, and we will both inherit mom's house.
Lawyer is now suggesting a deed with life estate as a way to avoid probate and protect the house from medicaid.
It makes me very uneasy to have my name on the deed, especially while my mom and sister are living there. Ideally I would never want any ownership of this house, but I do want my half of the money from the sale.
My sister has lived in the house with mom for years and plans to stay until one year after mom passes (I could see her staying longer but she has always been adamant she wants to stay for one year after mom dies and that's it.)
My ideal solution would be if there's a way for me to inherit money when my sister finally sells the house, but I don't ever want to be a legal owner of the house or be named on the deed along with her. Can a will be written that way? Would it work for a will to say the house will go into sister's name but when she sells the proceeds are to be split? (My sister is fine with that arrangement.)
The above is really all of the relevant info but for those wanting more story:
I'll mention that my mom and sister have a bit of a Grey Gardens dynamic going on, both in their relationship and their housekeeping. If I am going to take on the risk and burden of owning a home or being on the deed, I would need full control of the home. I'm not comfortable with the proposed scenario of having my mom and/or sister living in the house while I'm on the deed but not living there. I don't ever want to co-own property with anyone other than my husband. If I was the only one inheriting the house I would want my name on the deed for the shortest possible amount of time. I would want to quickly spruce it up and sell it immediately as soon as I inherit it. But that is not what my sister wants to do, in fact she starts wailing and sobbing when I bring up selling the house before the one year mark after mom's death. She is fixated on the idea of staying here for one year, and when she gets fixated like this there is no reasoning with her.
At the rate my mom is spending I predict that her $630,000 in IRA and annuities will be down to zero within 12 years. I have always assumed she will spend every last penny (the vast majority of which she inherited from my paternal grandma who she despised) and the only remaining "asset" will be her home (which incidentally I have always hated.) That'll be fun when the only inheritance is the house, and my sister wants to live in it long term...
Yes, a properly executed will (ie: a will that is recognized by your mom's state of residence...state requirements vary) can bequeath you an equal share of the proceeds from selling the house. This doesn't necessarily mean what's left of your mom's other assets would need to go through probate. If the house isn't mentioned in the will now, maybe it should be revised to make that clear. There could be direct beneficiaries assigned to her other assets to avoid probate. If the property is the only thing being probated it wouldn't necessarily be expensive or difficult to do.
My dad did this in CA. All his property and assets, including his house, were to be divided equally amongst his 3 heirs. His was the only name on the deed. I was his executor. I sold his house during probate. Each of us received 1/3 of the sale proceeds.
I'd be very sure to prepare some sort of legal agreement with your sister re the house. I can see a mess developing if you don't. The three of you need to clarify your options with the attorney. If your sister isn't named on the deed, she may not have the authority to sell the house after your mom passes. She wasn't the executor either. Your executor authority won't last indefinitely. Probate is finite. Someone will need to maintain the house and pay all the property expenses until the house is sold, so consider how that's going to happen.
Last edited by Parnassia; 08-10-2023 at 02:17 PM..
Yes, a properly executed will (ie: a will that is recognized by your mom's state of residence...state requirements vary) can bequeath you an equal share of the proceeds from selling the house. This doesn't necessarily mean all your mom's other estate assets would need to go through probate, maybe just the house. There could be direct beneficiaries assigned to her other assets to avoid that. If the property is the only thing being probated it wouldn't necessarily be expensive or difficult to do.
My dad did this in CA. All his assets, including his house, were to be equally divided amongst his 3 heirs. I was his executor. I sold his house during probate. Each of us received 1/3 of the sale proceeds.
Were any of your names ever on the deed? Who legally owned the home after dad passed away?
In my case the complicating factor is that my sister wants to live in the house for at least a year after my mom dies. If she was fine with selling asap this would be easier.
My mom's lawyer is pushing her to do a "deed with life estate" to protect the house from medicaid and avoid probate. But that would put my name and my sister's name on the deed immediately along with mom's and I don't want that. (I don't care if my sister's name is on the deed, as long as I can keep my right to half the proceeds when she finally sells it.)
Quote:
Originally Posted by Parnassia
I'd be very sure to get some sort of legal commitment from your sister to make sure there's no misunderstanding and that she follows through and vacates.
Yes I'm wondering if we could do something like that. Basically have the house go into my sister's name but with the stipulation that when she sells I get half the proceeds. Then additionally do a contract with sister that she will give me half the proceeds when she sells and maybe even stipulate a timeframe.
Probate isn't that difficult, and I personally think the tricks to avoid Medicaid are disgusting and theft from the rest of us. Leave things as they are, then sell the house when your mother dies. If your sister wants to live there, she can pay you market price for your half.
I inherited one third of my grandfather's house. It was sold immediately and I never appeared on the deed.
Probate isn't that difficult, and I personally think the tricks to avoid Medicaid are disgusting and theft from the rest of us. Leave things as they are, then sell the house when your mother dies. If your sister wants to live there, she can pay you market price for your half.
I inherited one third of my grandfather's house. It was sold immediately and I never appeared on the deed.
When I brought up this idea to her she lost it. Bawling her eyes out. "I can't believe you would do that to me"
My sister doesn't have any money, so if the only asset for us to inherit turns out to be the house, she'd have to take out a loan in order to give me half the fair market value. Just the idea of that would send her into a total meltdown. If there is any money left for us to inherit, it would apparently be totally unacceptable to my sister for her to give me any of it to buy me out of the house. She thinks that's not "fair" and "even."
When I brought up this idea to her she lost it. Bawling her eyes out. "I can't believe you would do that to me"
My sister doesn't have any money, so...
Mom is a smart cookie. She's set things up so the responsible daughter has enough self interest to keep things going
even if the er, less responsible daughter can't handle the situation.
Your sister says she will move out after one year, but where will she go to? Seems to me, she might change her mind & want to stay there.
Yes you can inherit without being on the deed, most houses that are inherited are done without being on a deed.
Were any of your names ever on the deed? Who legally owned the home after dad passed away?
No. One of probate's earlier tasks is to establish a formal name for the estate as a taxable entity. Also, to transfer ownership of all titled (real estate, stocks and some other types of investments, life insurance policies, a car, etc.) into it. What was "owned" by the testator is now owned by the estate. This makes it possible for the executor to do anything with it. An executor acts as personal representative for the estate...they act on behalf of and to benefit the estate. For example: property that used to be owned by decedent/testator Joe Doaks is re-titled to become property of The Estate of Joe Doaks.
In my case the complicating factor is that my sister wants to live in the house for at least a year after my mom dies. If she was fine with selling asap this would be easier.
You'll need to clarify this with the attorney and prepare some sort of agreement. There probably is a way to accomplish this but obviously I don't know it.
My mom's lawyer is pushing her to do a "deed with life estate" to protect the house from medicaid and avoid probate. But that would put my name and my sister's name on the deed immediately along with mom's and I don't want that. (I don't care if my sister's name is on the deed, as long as I can keep my right to half the proceeds when she finally sells it.)
Another option is for your sister to buy out your interest in the house. Simplistically, she pays you your share up front. Then she can live in it as long as she likes. You will have gotten your half and are no longer involved. Whatever happens to it is up to her for good or bad. If she needs to take out a loan for half the value of the house in order to pay you out, so be it. She needs to look at repaying her loan as a sort of rent or mortgage. What's wrong with her? Does she think she can live someplace Scot free forever? If she can't repay the loan she can sell what is now HER house (well, the house the bank now owns half of instead of you) whenever she wants after that and get out from underneath the loan.
The current value of the house would need to be established so she can pay you 1/2 of whatever that value is. Of course, what that value is probably won't be the same as in some future when she decides to move out. If the house is deteriorating, the current value might be higher than it would be at some future date, but it also might be lower.
You can't always have your cake (not being named on the deed or partly responsible for the house) and eat it too OP (getting your share out of it). This applies to both of you. She can't expect to park herself in property that also belongs to someone else indefinitely. There are pros and cons to everything. It has nothing to do with being "fair".
Yes I'm wondering if we could do something like that. Basically have the house go into my sister's name but with the stipulation that when she sells I get half the proceeds. Then additionally do a contract with sister that she will give me half the proceeds when she sells and maybe even stipulate a timeframe.
The obvious question you need to answer about that sort of agreement is what happens if your sister procrastinates, never moves out or sells. Some commitment or sideboards need to be set. Your sister needs to get a grip. If she has no money, how does she expect to maintain the house? Does she think your mom's non-existent funds will magically keep on doing that for her?
Actually, putting a formal agreement in place may help lay all the emotion aside because everyone knows what will happen and they can plan accordingly.
Last edited by Parnassia; 08-10-2023 at 03:09 PM..
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