Should My Name Be Added to the Deed?
Say you have one parent who has passed away, and you’re thinking of adding your name to the deed. Is that a good idea if the house is paid for? What if they had a revocable trust, and you as the child are the sole beneficiary and power of attorney for them? What happens if the other parent should pass away? Would it make any difference whether you are added to it or not?
Before you go signing your name to your parents’ deed, there are some things you’ll want to do first. Start by double-checking the trust document. The main reason that a lot of people set up living trusts is to be able to pass valuable assets free from probate—and their houses are normally included as one of the most valuable things they have.
So then, if the house is covered by the trust, there isn’t any reason to put your name on the deed, too, as the house will automatically pass on to you since you are the trust beneficiary. However, if the house is not covered by your parents’ trust, you can encourage the surviving parent to add it in, since that would be the most efficient and least costly way to make sure the house passes to you at the time of their death.
There are a few other issues to take into consideration as well, such as The Deficit Reduction Act that was passed into law in 2006. This Act created a new 5-year look back rule, which means that transfers of property in any manner is now subject to the 5-year look back. This is significant if your living parent would ever need to go to a nursing home or need Medicaid assistance. In cases like that, the nursing home and other creditors would be able to lay claim to the house if any potential transfer of property was within the new 5-year window.
What’s more—the Deficit Reduction Act made an opportunity for the elderly to create an Irrevocable Funeral Trust. With it, the senior can put up to $12,500 for final expenses that CANNOT be touched by nursing homes or other creditors. Around 85% of people will end up in nursing homes somewhere along the line, and the average cost of a nursing home residence is around $7,000/month. What this means for a lot of seniors is that if they are confined to a nursing home for long enough, their lifetime savings can be used up by the nursing home. This is why it’s important to plan ahead.
It is highly recommended that you consult with an elder law attorney in your area regarding this and any other issues or questions you may have about anything. He or she will be able to get you the answers you need or point you in the right direction so that you can find those answers for yourself.