Avoid title problems after co-owner’s death

DEAR BOB: The title to our home is in a living trust with myhusband and myself as trustees. My husband passed away a few months ago. ShouldI change the title and record a new deed in my name alone? –Rhoda C.

DEAR RHODA: If you and your late husband had a joint livingtrust, that document became irrevocable after his passing. I presume the termsof that living trust left the house to you but with title still in the name ofthe living trust.

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It is generally best to clear up any joint title problemsafter one of the co-owners dies. But in your situation, it might not benecessary to do anything, depending on the terms of the living trust. Checkwith a local attorney who specializes in living trusts just to be sure.

If title had been jointly held by another method, such asjoint tenancy with right of survivorship, then it would be necessary for you toclear your deceased husband’s name from the title. In most states, all that isrequired to clear the name of a deceased joint tenant is to record a certifiedcopy of the death certificate and an affidavit of survivorship with the localrecorder of deeds.

Unfortunately, many people neglect to clear titles soonafter a deceased owner or co-owner dies. Then when the property needs to besold, time-consuming probate court proceedings become necessary so the titlecan be transferred. That’s why it’s best to take care of title matters promptlyafter the death of an owner.


DEAR BOB: In a recent item in your column, you indicted aseller who carries back the mortgage for a buyer is creating an installmentsale to spread out the profit tax. A carryback mortgage is a true salereportable to the IRS. But an installment sale spreads out the income and theseller retains the title. Am I wrong? –Bill McC.

DEAR BILL: When a property seller carries back a promissorynote secured by a mortgage or deed of trust recorded against the title, that isan installment sale entitling the seller to spread out the capital gain taxpayments to the IRS over the years of receiving payments from the buyer.

When the seller retains the title, and the buyer makesmonthly payments to the seller, that is usually called a contract for deed,installment land sale, or other similar name. It is usually treated as aninstallment sale.

However, an installment sale seller can elect to pay all thecapital gain tax in the year of the property sale. The IRS will gladly acceptyour tax payment.

Either way, the interest portion of each payment receivedfrom the buyer by the seller is taxable as ordinary income. For full details,please consult your tax adviser.


DEAR BOB: My father died recently. He left about 60 acres ofland equally to his five children, including me. In my opinion, this isworthless land, which isn’t good for farming, home building or anything else.About $11,000 of unpaid property taxes are owed on it. My siblings want each ofus to pay one-fifth of the overdue property taxes to avoid a tax sale. Can theyforce me to pay my share? –Jim N.

DEAR JIM: No. You can renounce your inheritance share of thatland. The result will be your four siblings then own it but you have noownership share in it so you then won’t have to pay any part of the overdueproperty taxes. For more details, please consult a local probate attorney torenounce your inheritance.

The new Robert Bruss special report, “Pros and Cons ofToday’s Five Best Real Estate Profit Opportunities,” is now available for$5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this columnare welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center

Copyright 2006 Inman News

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