Monday, January 11, 2016
Is it good advice to tell kids with POA to add themselves to parent's home?
Posted by Lynne Butler
"My mom owns her condominium and only her name is on the deed. My two sisters have power of attorney. My mom's lawyer is advising my two siblings to have their name included on the deed to avoid a lengthy and costly court procedure to sell the property once my mom is deceased. After reading some comments and responses on this blog, I am concerned about this recommendation and wondering if my siblings should proceed with the lawyer's recommendation?"
Obviously the lawyer who gave the recommendation knows the case better than I do, and he or she may be aware of facts that could theoretically make this a good idea. But in the absence of those facts, I don't see this as being a good idea.
There is no "lengthy and costly court procedure" involved in selling your mother's property once she passes away. I suspect the lawyer may be referring to the executor getting probate, which is the only court procedure that would be needed. Probate isn't lengthy, and unless it's a million-dollar condo, it isn't particularly costly either.
Assuming there was some cost saving by avoiding probate (which in turn assumes that there are no other probatable assets in the estate), those costs could be multiplied if there is any problem selling the house later. And if anyone out there thinks it's easy for two siblings to agree on a sale price, sale date, and sale condition of a parent's home, they are willfully blind.
Then there is the creation of tax liability. If only your mother's name was on the condo and it was sold, as her principal residence, it is tax-free. If the siblings' names are added and they own their own homes, their portion of the sale is not tax-free. Will they try to get the estate to pay their capital gains tax? And if so, will that be more than the probate fee (probably) and will it also require lawyer's fees for the dispute that will arise when the other beneficiaries refuse to allow it (again, probably)?
I am puzzled that your mother's lawyer would give advice to the people acting under her Power of Attorney that would seem to jeopardize your mother's current assets. Adding unnecessary names to a title creates huge risk to your mother. She could lose her condo through no fault of her own if one of your siblings got divorced or was sued. It's simply unfair to your mother to have to carry that risk so that someone doesn't have to bother going through probate later on.
I also have a problem with a lawyer counselling people who are acting under a Power of Attorney to transfer assets into their own names. Their job is to act in the best interest of the person they represent, and ONLY that person. Not themselves. Not their siblings.
So, on the face of it, I don't agree with the lawyer's recommendation. As I said, I don't know everything about this estate. I only know what you've told me. But based on that information, it doesn't seem like good advice.