Get advice before transferring house deed

Dear Liz: My mother will be 88 in August. She owns her own condo, which is worth about $95,000, and has $5,000 in life insurance. She is in good health and lives comfortably on a monthly pension. She wants to put her condo in the names of my brothers and myself. What is your advice?

Answer: This is probably a bad idea for a couple of reasons. You and your siblings wouldn’t get the “step up” in tax basis that would be available if you inherited the property. In other words, you might owe capital gains taxes when you sell that could have been avoided if you had inherited the property rather than received it as a gift.

A potentially bigger issue: Medicaid look-back rules. If your mom needs nursing home care, her eligibility for the government program that pays for such care could be compromised by such a transfer. Many elderly people transfer their homes to children hoping to “hide” the asset from Medicaid, but all such transfers typically do is delay the older person’s eligibility for help.

Before she does anything, take her to an elder-law attorney who can help her — and you — plan sensibly for her future. You can get referrals from the National Academy of Elder Law Attorneys at http://www.naela.org.

Son-in-law badgers elderly couple for money

Dear Liz: I am 84, and my husband is 88. We have two daughters, the elder of whom is married to a very controlling man. In the past, we lent them money and were paid back. But starting in 2009 his small business began to do poorly. They borrowed nearly $100,000 from us. Then in 2010, he begged us to get a home equity loan on our home, which was paid for.

They now owe us $300,000. We make the home equity payments of $800 a month because they are not able to pay that amount. He said he planned to sell a parcel of land to pay us back. Now he wants to borrow from my individual retirement account. He is telling our daughter to go after us and what to do. So I told my daughter and her husband, no more!

We are so sad. We didn’t expect to have money problems at this age. We wanted our estate to be divided equally between our daughters. But we’re wondering if we should make a new living trust to reflect the debt owed to us. Should we consult a lawyer?

Answer: You absolutely need a lawyer. Not just to draw up a new trust but to stand between you and the financial predator you call a son-in-law.

Badgering people in their 80s for money could be considered a form of elder abuse, and the amount he’s squeezed out of you is horrific. If either of you died or became incapacitated, he could swoop in to clean you out completely.

An elder law attorney can help you protect your finances and figure out what to do about this debt. It certainly would be understandable if you wanted to deduct the money you’re owed from your elder daughter’s inheritance, but you can expect this bully to cause misery regardless of what you decide.

Not that you needed more to worry about, but what you’re calling a home equity loan may well be a home equity line of credit. Although home equity loans come with fixed rates, lines of credit do not — which means the payments that are difficult for you to make now will be more expensive when interest rates rise. In any case, you might want to ask the attorney about the feasibility of a reverse mortgage, which could allow you to pay off the loan without having to make further payments.

You can get referrals to the National Academy of Elder Law Attorneys at http://www.naela.org. If your other daughter is trustworthy, please enlist her help in looking for and speaking with an attorney. She needs to know what’s going on so she can help in your efforts to protect yourselves from this man.

Stepdaughter wants “everything”: what does she deserve?

Dear Liz: Your column from the person who wanted “heirlooms” from her stepfather is applicable to my situation. My husband’s daughter wants literally everything in my house, even though he and I commingled our assets 23 years ago and have been married more than 10 years. How do I access public records to see if her mother did have a will?

Answer: It’s interesting that your husband can’t clear up this mystery. Presumably he would know whether his late wife had a will and what it said.

You can check with probate court of the county where she died to determine if a will was filed. If she had a living trust, that would be private and probably not filed with the court, but your husband should know what it said.

If she had no will or living trust, then your husband was supposed to follow state law in dividing up her possessions. In community property states, without a will or trust he typically would inherit stuff acquired during their marriage, plus a share of any separately held assets — possessions she brought to the marriage, said Burton Mitchell, an estate planning attorney with Jeffer Mangels Butler & Mitchell in Los Angeles. In other states, your husband might inherit half of her assets, with the other half divided among her children, Burton said.

State laws vary widely and there are all kinds of exceptions to the general rules, so you may need a lawyer’s help in sorting out what belongs to whom.

In any case, you’d be smart to hire an estate-planning attorney at this point. Your stepdaughter may not be able to pursue a legal case after all this time, but she could cause trouble when you or your husband dies. Any time a relative creates a real fuss about an estate division, it’s good to get a qualified attorney’s advice as you craft your own wills or living trusts that spell out who gets what.

As you make your plans, try to be guided by kindness and compassion. Your stepdaughter may not have a legal right to lay claim to every item in your home, but letting her have items of strong sentimental value may be the right thing to do. Just think how you would feel if your father’s second wife gave your mother’s special jewelry or your grandmother’s treasured antiques to your step-siblings. Lifelong rifts and family feuds have started over less.

Then again, all parties need to remember that stuff is just stuff. What’s a precious heirloom to one generation may wind up in the next generation’s garage sale. Resolving to put relationships first, instead of possessions, can really help all sides avoid painful battles.