DEAR BENNY: My husband passed away recently. I need to know what to do and where to go to have his name taken off the title to our house. It’s in both our names, and he left a will stating everything goes to me. Can I do this myself, as money is pretty short now? –Marcia
DEAR MARCIA: My condolences on your loss. You situation is not at all serious and frankly — depending on how title was held — you really don’t have to do anything at all.
Generally speaking, there are four ways that title can be held:
1. Sole ownership — just one person is on title;
2. Tenants in common — here, each owner has an interest in the property. It can be 50-50, or any percentage that is agreed upon. On the death of one tenant in common, his/her interest goes as instructed by the last will and testament. If there is no will (and there should be), the laws of intestacy in your state will determine who gets that interest;
3. Joint tenants with rights of survivorship — on the death of one joint tenant, the survivor automatically (by operation of law) becomes the owner of the property. Probate is not required. In fact, even if the deceased person’s will gives the property to someone else, the will is ineffective, because the way that title was held will control the distribution;
4. Tenants by the entirety (T/E) — this is very similar to joint tenants, but reserved for husband and wife. (Note: in some states where same-sex marriages are valid, title can be held as tenants by the entirety.)
T/E is very sacred, and unlike other ways that title is held, cannot be broken or divided without the consent of both husband and wife.
I assume that you and your husband owned the property as T/E. If that’s the case, while you may want to go through the process of changing title into your name as "sole owner," it really is not necessary. So long as you have your husband’s official death certificate, you own the property by operation of law. The fact that the county still shows your husband as a co-owner is irrelevant. If you ever want to sell, all you have to do is produce the death certificate.
Of course, if you really want to have his name removed, you can ask your attorney to prepare a deed reflecting that you originally owned the property as T/E but on his death the property is now legally vested in your name.
DEAR BENNY: I have been working with my bank on a loan modification, but just received a notice of foreclosure. I contacted the lawyer who is handling the foreclosure process, but she said she is acting on instructions from the lender and there was nothing she could do about stopping the process. What’s going on, and what remedy do I have? –Anonymous
DEAR ANONYMOUS: This is a nationwide problem: The bank and the bank’s lawyer are just not communicating with each other. But help is on the way. In May of this year, for example, the Supreme Court of South Carolina ordered lenders not to foreclose until they can demonstrate that they have given homeowners a meaningful opportunity to modify their loans. And the "demonstration" must be in the form of a certificate filed with the court before any foreclosure can take place.
I also understand that similar requirements exist in New York and Connecticut. Furthermore, the attorneys general of a number of states have been negotiating a number of issues with the banking industry, and your problem is one of the highlighted issues.
Also, many states have enacted legislation requiring lenders to mediate with homeowners before any foreclosure can take place — the goal is to try to reach an amicable resolution, such as a true loan modification.
So, perhaps this new wave of legislation and court orders is "too little and too late," but it clearly is a step in the right direction for those who have not yet been foreclosed upon.
What should you do? You should immediately contact the attorney general’s office in your state, and file a complaint against your lender. You should also send the bank’s attorney a certified letter (return receipt requested) advising that if the foreclosure takes place, you reserve the right to file complaints (or even a lawsuit) against the law firm. Demand that the attorney get all of the facts; if you have anything in writing from the lender, include that information in your letter to the attorney.
In the final analysis, if all else fails, you should retain your own attorney to file a lawsuit to enjoin the foreclosure sale.
DEAR BENNY: My two brothers and I inherited a house when my mother died in February 2011. We have been to court for probate where we submitted my mother’s will and paid the estate tax. My brothers both agree that I can have the house and that I should take title to it. The mortgage is paid. My parents are listed as the home’s "owners" on the updated county land records website.
What steps I do need to take to change the house title to my name and to show that my two brothers do not want to share in the title? Is this something I can do myself by submitting certain documents to the county? –Edward
DEAR EDWARD: The process is not as simple as you may think, as there may be tax issues involved — especially for your two brothers.
I have to give you only general advice, as state laws differ regarding probate proceedings.
Since your mother died, you have indicated that you went to probate. In many jurisdictions, the personal representative (referred to as PR, and as determined by the last will and testament) becomes the owner of the property.
Technically, the PR should then prepare a deed conveying the property as instructed by the will. In your case, the deed should reflect that you and your two brothers own title either as joint tenants with rights of survivorship or as tenants in common. If any of your brothers have their own family, they would want title to be held as tenants in common.
Then, your brothers should prepare a deed conveying their one-third interests to you.
You really need an attorney to assist you. For example, I do not know if your jurisdiction will permit the PR to just convey the property to you, thereby bypassing the need to have two sets of deeds.
And as indicated, there may be tax consequences. Each of your brothers have inherited one-third of the property. If they are giving it to you, this will be considered a gift, which may require each of them to prepare (and file with the IRS) a gift tax form.
Finally, you have to determine what your tax basis of the property will be. When you ultimately sell, you may be able to exclude some of your profit, if you have owned and used the house for two years out of the five before it was sold.
According to IRS Publication 523, entitled "Selling your Home," you can exclude up to $500,000 of the gain on the sale of your main home "if all of the following are true: you are married and file a joint return for the year (of sale); either you or your spouse meets the ownership test; both you and your spouse meet the use test; and during the two-year period ending on the date of the sale, neither you nor your spouse excluded gain from the sale of another home."
But your house may appreciate in the future more than the up-to-$500,000 exclusion (or if you do not file a joint return, the exclusion is limited to up-to-$250,000 of gain), in which case you may have to pay capital gains tax. More importantly, there is absolutely no guarantee that Congress will preserve this favorable tax benefit for American homeowners.
Accordingly, you must determine now what your tax basis is.
You really should consult with local counsel knowledgeable about real estate, tax and probate matters. Your attorney can also advise you about a concept called "disclaimer." This means that your brothers file a statement stating that they are not interested in the inheritance. State laws differ about the deadlines for filing such a disclaimer. Under federal law, generally one must disclaim within nine months from the date of death. This — if applicable — will keep the property from being owned by your brothers for federal tax purposes.