Originally Posted by
ScottGem
So, get your parents to make a will. OI better yet, have them put you and your siblings on the deed.
I disagree with you Scott.
Not about the parents making a will, that they SHOULD do.
But, they should NOT put the children on the deed.
Why not?
Reason 1:
Let's say one of the children gets into a financial mess. Then, all of a sudden, a lien can be placed on the house.
Let's say in 5 years the parents decided they want to sell the house to move into a condo. Now, they can't since there is a lien on the property.
Reason 2:
How much did your parents pay for this house when the bought it? Let's say $200,000.
When you sell a house, you must tax on the difference between the selling price and the purchase price.
Let's say the house is worth $500,000 today. If they were to sell it today, they would pay tax on $300,000 (500-200).
However, if your names are added on, your cost based will remain at $200,000.
However, if you receive the house via a will when they die, your cost base will be bumped up to current market value.
So, if they were to die today, your cost base would be $500,000. If you sold it then at $500,000, you would not pay anything in taxes.
Why should you do it?
If you know 1 sibling will challenge the will and the legal costs will be far higher then its worth, and all have good credit, then go for it. But it is a risk. If one sibling gets into financial trouble, then ALL siblings and parents suffer for it.
But, your parents should NOT put you all on the deed.
Instead, have them make out a will ASAP.
And what they need to do is to tell the lawyer about what the grandchildren want to do (sue when the die) and he can structure the will in such a way to make it very hard for them to ever see a penny.