Another Morbid Question

[DaisysMom]

My 84 year old mother, God Bless Her!!....in order to save us 4 kids the trouble of probate, put her bank accounts and propery into survivorship deeds and accounts naming me as the person who will get everything. My siblings are aware of this and when the inevitable happens, we will all work together and everything will be divided evenly. She does have a will, but it says nothing specific, except that we are to share evenly.

So the question is....if God Forbid, something happens to my Mother, would the assets be considered part of the BK (even though there would be no probate) and would my siblings lose out on their inheritance because of my financial woes? Should I approach my Mother and ask her to reassign my sister as the survivor to get control of the assets? This would be expensive and I am not sure how my mother would react to having to do all of that again.

I know this is morbid, and I absolutely hate even discussing it, but I would also hate to have my siblings lose out because of me. I will be filing within the next week or two and want to have my ducks in a row.

BTW, my Mom is pretty healthy and doing well, so this is probably a non-issue. But as we all know, life is strange, and you never know. Just want to be prepared for the unexpected when it can impact the other people I care about.

DM

[AngelinaCat]

One of the questions you are asked at your 341 is if you are going to get an inheritance in the next 180 days. That would be considered part of the BK estate. I don't remember if you are a pro se filer, or if you have an attorney, but if you do have an attorney, this is an excellent question to ask him or her.

Do your siblings know that you are planning to file?

Please God, I hope your mother will continue to be okay. Good wishes to you!

[LadyInTheRed]

I don't see it as morbid at all. It's practical planning. I'm an estate administration paralegal, and see what can happen if people don't think and talk about these things. My mother really appreciates the fact that when she wants to talk about her estate planning, I don't shy away from it like my sisters do.

Whether there is a probate is irrelevant. If you become entitled to the asset within 180 day of filing, it is part of the BK estate. Unless you have a legal obligation to transfer the property to your siblings, and it sounds like you don't, the trustee will go after it. Before I filed, I told my healthy 72 year old mother about the issue and let her decide what, if anything, to do. She amended her trust to make my husband a beneficiary in my place. (I filed alone and an inheritance is separate property).

Another issue you should be aware of is that when you transfer the property to your siblings, you will be making gifts to them. So, depending on the value of the property, you may have to file a federal gift tax return to report your gift to your siblings even if you don't have to pay any tax. If you give gifts totaling $13,000 to any one person in 2012, you have made a taxable gift and have to file a gift tax return, but you don't have to pay gift tax unless you are fortunate enough to be able to make $5,000,000 in gifts during your lifetime. This is all going to change for 2013, but nobody knows for sure how until congress takes action (or doesn't before the end of the year). There may also be state gift tax issues.

If your mother wants your siblings to get equal shares of real property, it really is better for her to have deeds recorded that reflect her true desires.

[MSbklawyer]

It's NOT a non-issue. Not at all. It's very much an issue. Your interest in your mother's assets are considered part of your bankruptcy estate even if something DOESN'T happen to your mother.

What you are describing is a life estate / remainder interest. Effectively, the owner of property conveys it to someone else, but reserves the rights to it for as long as they live.

In other words, you ALREADY own an interest in the property. It's called a "remainder" interest. Remainder interests can be bought and sold just like any other interest in property. The older the life tenant (i.e. your mother) is, the more valuable the remainder interest is. You -- or the trustee -- could sell your interest in your mother's property. The property would remain hers until the day she dies, but on that day, it becomes the property of the remainderman.

There are tables that you can use to value the life estate / remainder interest. They vary, depending on the discount rate you use, but this one is typical

http://info.dhhs.state.nc.us/olm/manuals/dma/abd/chg/MA2230f4.pdf

If your mother is 84 years old, your interest in the property is valued at ~ 60% of the gross value of the property.

With bank accounts where you have a right of survivorship on the account, this could be fixed by having her withdraw the money. But with real property (i.e. land) you are in a jam because she can't sell the property without you joining in the conveyance. If you simply convey your interest in the property back to her, you've got a fraudulent conveyance problem unless, of course, she pays your fair value for it.

I hate to be the one to break this to you, but if your mother owns a substantial amount of land and you have a remainder interest, you've got a real problem going into bankruptcy.

[MSbklawyer]

Daisysmom, that earlier post is written with the assumption that you've not already filed. I don't get here as much as I used to and it's hard for me to keep up with everyone's status. If you owned the remainder interest when you filed, it is part of the bankruptcy estate.

[AngelinaCatHub]

Daisysmom, that earlier post is written with the assumption that you've not already filed. I don't get here as much as I used to and it's hard for me to keep up with everyone's status. If you owned the remainder interest when you filed, it is part of the bankruptcy estate.

NO EXCUSE 'MS':

We have missed you, brother. Now, I ask, this woman is "healthy" according to her son. Can she not make a Will more specific? You know, anyone can die at anytime. God is our time clock. Many who have survived to 85 have lived beyond this time. Many whom are young drop dead for no appearant reason at 20 or the likes.

That being said, aren't we ALL (whom have elders living) suspects to getting an inheritance? Perhaps not known but so many stories of Uncle "Jeb" gave you a million and the person says, "who is he?".

I think our OP needs to have Mom revise her will to a specific equation or even a Trust. Then he can continue his objective. 'Hub

[MSbklawyer]

NO EXCUSE 'MS':

We have missed you, brother. Now, I ask, this woman is "healthy" according to her son. Can she not make a Will more specific? You know, anyone can die at anytime. God is our time clock. Many who have survived to 85 have lived beyond this time. Many whom are young drop dead for no appearant reason at 20 or the likes.

That being said, aren't we ALL (whom have elders living) suspects to getting an inheritance? Perhaps not known but so many stories of Uncle "Jeb" gave you a million and the person says, "who is he?".

I think our OP needs to have Mom revise her will to a specific equation or even a Trust. Then he can continue his objective. 'Hub

Thanks for the welcome-back, Hub.

What Daisysmom described is not an inheritance situation. When someone sets up a deed where they convey property with the reservation of a life estate (Daisysmom referred to it as a survivorship deed) there is no inheritance. It is an inter vivos transfer of rights in the property. In other words she now owns a present interest in her mom's property. All that her mom owns is a right to use the property until she dies. Daisymom's interest in the property is called a "remainder" and it exists right now. It doesn't come into existence upon her mom's death like an inheritance does. It is a vested interest in the property. It ripens into full ownership of the property upon her mom's death. If all that Daisysmom had was the right to inherit the property, that is a 'contingent' interest. Her mom could revoke that at any time or Daisysmom could die before her own mother did.

But a remainder interest exists right now, in the present.

[LadyInTheRed]

I had never heard of a "survivorship deed" and when I did a quick google search earlier, I read something that lead me to believe that executing a survivorship deed created a gift to vest a death that could be revoked during the grantee's life.

MSBklawyer, thanks for clearing up my misunderstanding. I did more googling and found information that leads me to believe that a survivorship deed is the same as a joint tenancy deed. I then found this Ohio survivorship deed form: http://fiscalofficer.cuyahogacounty....ipDeedForm.pdf. If DaisysMom's mother's deed has similar language without any reservation of a life estate, doesn't the DaisysMom have a vested present interest that is more valuable than the remainder interest you described?

I think we need more information on the language of the deed to determine whether DaisysMom has a future interest or a more valuable current interest.

ETA: I should have said "joint tenancy with rights of survivorship" above.

[AngelinaCat]

Hi Lady. We have them in Florida. When my Mother started going bad with the Alzheimer's, our attorney drew up a deed for both of us where she was the main title holder, but my name was put on it with the 'Right of Survivorship' clause. She still had to be the main title-holder, because she got a 'Head of Household Exemption', and 'Widows Exemption' in addition to the Household Exemption on the property taxes.

We also did this because her brother was circling around like a damned, shendyfleckin buzzard, waiting to see what he might be able swoop in and get on her death.

Good wishes to you!

[LadyInTheRed]

Okay, I'm going to answer my own question now. Assuming the property in question is in Ohio, if a Survivor's Deed is what was executed, it is the same as joint tenancy and DaisysMom has a present interest in the property. http://codes.ohio.gov/orc/5302.20 That may not be true of a deed executed before 1996 when the law became effective.

[MSbklawyer]

Whether the deed is a joint tenancy with rights of survivorship, or whether it is a life estate / remainder, Daisysmom owns an interest in her mother's property right now. If she files bankruptcy owning either a joint tenancy or a remainder interest, that interest becomes property of the bk estate. That's entirely different than being the beneficiary in a will where the interest comes into being only upon the death of the testator.

Yes, more information on specifically what the deed says would be helpful. But I suspect it is a life estate / remainder arrangement. Lots of people use that as an estate-planning tool because it avoids the need for probate. With an inheritance, the beneficiary only gains rights in the property when the testator dies. With a life estate / remainder interest though, the remainderman owns a present interest in the property.

The deed in your link is a joint tenancy with rights of survivorship. If this is what Daisysmom has, it would allow the trustee to sell the ENTIRE property, even before her mother died, though her mother would get part of the proceeds of that sale.

[LadyInTheRed]

Whether the deed is a joint tenancy with rights of survivorship, or whether it is a life estate / remainder, Daisysmom owns an interest in her mother's property right now. If she files bankruptcy owning either a joint tenancy or a remainder interest, that interest becomes property of the bk estate. That's entirely different that being the beneficiary in a will where the interest comes into being only upon the death of the testator.

Yes. Got that.

The deed in your link is a joint tenancy with rights of survivorship. If this is what Daisysmom has, it would allow the trustee to sell the ENTIRE property, even before her mother died, though her mother would get part of the proceeds of that sale.

After posting that link, I also found Ohio's statutory Survivorship Deed, which is also a tenancy with rights of survivorship deed. http://codes.ohio.gov/orc/5302.17 It's possible the deed Daisysmom's mother signed had additional language.

Ohio also has a statutory Transfer on Death Designation Affidavit which seems to negate the need to transfer the property reserving a life estate in order to avoid probate: http://codes.ohio.gov/orc/5302.22

[MSbklawyer]

5302.22 Transfer on death deed form.

http://codes.ohio.gov/orc/5302.22

That's interesting. I wonder if the transferor can revoke that affidavit of transfer? Could lien creditors of the transferee intercept that transfer?

[LadyInTheRed]

5302.22 Transfer on death deed form.

http://codes.ohio.gov/orc/5302.22

That's interesting. I wonder if the transferor can revoke that affidavit of transfer? Could lien creditors of the transferee intercept that transfer?

I wondered that too. I didn't see anything in the Ohio law that answers the question.

[LadyInTheRed]

More googling! This article on Avvo, written by an Ohio attorney, says that a transfer of death affidavit is revocable and that the beneficiary cannot encumber the property. http://www.avvo.com/legal-guides/ugc...ath-affidavits

I fear that is not going to help Daisysmom unless she misstated or misunderstood what her mother signed.