QDEAR BOB: After the death of my husband in October 2004, our home became mine by joint tenancy with right of survivorship. I would now like to deed my home to my youngest daughter. However, I am afraid to deed it to her now. I do not feel she would put me out. Instead, I am afraid if she and her husband are sued, my house could be taken. I am going to put her on my deed for survivorship. My problem is if I get sick and have to go to a nursing home, I do not want Medicaid to get my home. Is there any solution to this problem? -- Beatrice J.
ADEAR BEATRICE: Presuming that you cleared your late husband's name from the home's title and that you have substantial equity in your residence, why do you want to complicate the situation by adding your daughter to your title and giving up control?
A better alternative is to create a revocable living trust and then deed the title to your home and other major assets into your living trust. You then maintain 100 percent control and can refinance, sell or do whatever you want with your living-trust assets. If you become incapacitated, your living trust successor trustee, presumably your daughter, can manage your home and even sell it if necessary to pay for your care.
Should you need income, you could obtain a reverse mortgage. If your younger daughter is on the title, she would disqualify you from a reverse mortgage.
If you become sick and have to go to a nursing home, then your home could be sold to pay for your care in a facility. Medicaid is designed for individuals who can't afford the best care.
While you have substantial home equity, it's yours to use and enjoy.
DEAR BOB: My credit is poor because of a long spell of unemployment and because of financial mistakes I made when I was single. I am now married and my husband bought a house in September 2000. He recently applied for a home equity loan through the current mortgage holder. It was denied because of "uncreditworthiness" of the co-applicant. I never applied for the home equity loan. He wants to add a deck, put in hardwood floors, replace the carpet and paint. He would then like to sell within a year. Any suggestions? -- Lynne W.
DEAR LYNNE: If title to the home is held in your husband's name alone, and if his credit is good, he should have no problem obtaining a home equity loan or credit line.
However, if your name was added to the home's title after the marriage, the lender then must also consider your credit because you will be a co-borrower.
If that is the situation, you can sign a quit claim deed to your husband to remove your name from the home's title so he can obtain a home equity loan in his name alone based on his good credit. He should consult a loan officer at the bank where he applied for this financing for details.
DEAR BOB: My two sisters and I recently inherited a house worth about $750,000 from our late mother. None of us wants the house because we each live far away. We want to sell it as soon as title is transferred to our names by the probate court. How much inheritance tax must we pay on this house? -- Ben H.
DEAR BEN: The answer depends on the residence state of your late mother. Some states have abolished inheritance taxes on heirs who receive inherited property, but others still cling to this tax revenue source.
If your mother died in 2004 or 2005 and left a net estate exceeding $1.5 million, then a federal estate tax will be due. The estate executor must pay any federal estate tax before distribution of assets to the heirs.
If the estate taxes can't be paid out of liquid assets, such as bank accounts, stocks and bonds, then the house might have to be sold to pay taxes and you will receive cash instead of the house. Consult a lawyer for details.
DEAR BOB: Is there any way for a landlord to look at a prospective tenant's credit prior to renting to them? And is there any way for a landlord to report on a bad tenant? -- Patty R.
DEAR PATTY: Smart landlords always obtain a copy of a prospective tenant's credit report and the Fair Isaac Corp. score before renting. Most cities have tenant screening companies that, for a fee, can obtain credit reports, FICO scores and court records of any evictions of your applicant.
If you don't want to hire one of these companies, you can ask your prospective tenant to supply their credit report and FICO score. The best source is www.myfico.com. The cost is $14.95 per report. While you are interviewing the tenant, you can have the applicant run his own credit report on your computer in your office.
Unless you are a member of a credit bureau, you can't report on a bad tenant who didn't pay the rent.
DEAR BOB: My husband and I were married 24 years when he asked for a divorce in 2001. He soon remarried. I got the house in the divorce settlement, but he never removed his name from the title. He died last year. How can I get his name off my home title? His second wife inherited everything under his will. -- Jeanne C.
DEAR JEANNE: If you and your late ex-husband held title as joint tenants with right of survivorship, in most states all that is required to remove a deceased joint tenant from the title is to record a certified copy of the death certificate and an affidavit of survivorship. However, if you and your late ex-husband held title by another method, such as tenants in common, a court order will probably be necessary to clear your title. The divorce lawyer who represented you can probably clear your title, which should have been resolved at the time of the 2001 divorce.
DEAR BOB: We recently listed our home for sale at a reduced 5 percent sales commission because homes in our area sell with little agent effort. Within two weeks, we received several purchase offers exceeding our asking price. We accepted the best one and successfully closed the sale. However, we later learned from the buyer's agent she received a 2 percent commission and our listing agent kept a 3 percent sales commission. Is this legal? We thought our listing agent would take a 2 percent or 2.5 percent commission. -- George Y.
DEAR GEORGE: The sales commission split between the listing agent and the selling agent is strictly a matter for the agents to negotiate. Usually, the listing agent specifies the commission split in the multiple listing service description of the home.
When a listing agent offers an abnormally low commission split in the listing service, such as 2 percent, many buyer agents refuse to show the property unless they have nothing else to show their prospective buyers.
Your listing agent offering only a 2 percent commission to the selling agent probably hurt you because many buyer's agents didn't show your home to their buyers. I don't see any remedy for you other than to never recommend that agent.
DEAR BOB: My late mother and I were owners of her condominium by joint tenant with right of survivorship. I knew she had tax problems and the IRS had filed a tax lien, but we never discussed it. As the surviving joint tenant, I would like to sell the condo. The IRS has a $14,000 tax lien on file. Do I have to pay off that $14,000? -- Brent H.
DEAR BRENT: Probably not. The general rule is a recorded lien against a joint tenant does not survive the death of that joint tenant. In other words, when the joint tenant dies, the recorded judgment or IRS tax lien against that joint tenant also dies.
Consult a local title insurance company to review your title and determine what steps are necessary to clear the title so you can sell the condo. Because the IRS did not enforce its recorded lien before your mother's death, the lien against her joint-tenancy interest was probably wiped out when she died.
DEAR BOB: About three years ago, when my health was poor, I let my son convince me to add him to my home's title as a joint tenant with right of survivorship. At the time, he had graduated college and had a great job. Then something changed and he became became a deadbeat, often asking me for money that he never repaid. Now I want to sell my home, worth about $650,000, so I can move to a life-care retirement villa, but my son refuses to quit-claim his interest in my house unless I give him $325,000 from the sales proceeds. The only reason I put my son on my title was to avoid probate after I died. What can I do to sell my house without paying my son $325,000? -- Gracie T.
DEAR GRACIE: Some real estate questions have no easy answers. Yours is one of them. I'm sure you realize what a huge mistake it was to add your son to your title, but you had no reason at that time to suspect he would turn against you.
Many parents add their adult children to their real estate titles as joint tenants with right of survivorship to avoid probate when the parent dies. However, some offspring change, as your son did.
The best I can do is suggest you consult a lawyer to see if there is any legal alternative available in your sad situation to get the son off the title to your home so you can sell it.
DEAR BOB: We bought our home about two years ago. At that time, we received a title report but didn't really study it because the lender approved our mortgage and the sale closed successfully. However, the city recently informed us it will be necessary to dig up a big portion of our back yard within their five-foot-wide easement, including where we built a $5,000 gazebo with a hot tub, so they can install a sewer pipe. Shouldn't the real estate agent who sold us our home have told us the city had the right to dig up our back yard? -- Rolf R.
DEAR ROLF: As a home buyer, it was your duty to examine the title report provided and to ask any questions about the city sewer utility easement under your back yard. Most properties are subject to utility easements, often underground. If the public utility needs access to its easement for that new sewer line, you must suffer the loss of removing your gazebo and hot tub, which you should not have built in the easement area. The city has no duty to reimburse you for your expense.
DEAR BOB: I bought my home in 2002 and put the title in both my name and my nephew's name with "right to survivorship." If he decides to sell after I die, will he have to pay capital gains tax on the appreciated value of the home, which would be about $150,000? -- Loretta K.
DEAR LORETTA: As surviving joint tenant, your nephew will be entitled to a new stepped-up basis to market value on the day you die for the 50 percent of the property received from you. However, his original 50 percent of the property won't receive a new stepped-up basis to market value on the date of your death. Consult a tax adviser for details.
DEAR BOB: In 2003 I filed for bankruptcy, but the mortgage company refuses to foreclose. I continue to receive the bills and property taxes. I am retired, age 71, my income dropped significantly, and I cannot afford to maintain the property. What are my options? -- Ethel J.
DEAR ETHEL: There must be some reason your mortgage lender doesn't want to foreclose if you haven't been paying the mortgage payments. Maybe the property is worth less than the mortgage balance and the lender doesn't want to acquire title by foreclosure because of possible liabilities, such as unpaid property taxes.
Meanwhile, because you still have possession, you can either live in the property or rent it to tenants. Because the property taxes are unpaid, eventually the county or city will hold a property tax sale of your property. That will wipe out the mortgage lender's lien against your property.
If there is any equity in the property, if you have been discharged from the bankruptcy and still own the property, you can sell it to salvage any remaining equity. For full details, consult your bankruptcy attorney.
DEAR BOB: In the past few months, I noticed you had several items about widows who were left life estates in the family homes after the husbands died. I am involved in such a messy situation as a remainderman. My stepmother has a life estate in her late husband's house. But she is letting the house run down terribly. She is only 73 and in pretty good health. We are friendly, but not close. Is there anything I can do to give her an incentive to maintain the house so I will have something of value to receive if I outlive her? -- Joyce R.
DEAR JOYCE: The essence of your question seems to be, "Are life estates always bad?" The answer is they can serve a valuable purpose when the life tenant lives up to the responsibilities of maintaining the property which the remainderman will eventually receive.
Consult a local real estate lawyer to determine if your situation has evolved into a condition of "waste." That means the life tenant is seriously failing to maintain the property. If you can prove a waste situation to a judge, he can order the termination of the life estate and you will own the property free of the life estate.
DEAR BOB: My neighbor has two large trees, about 60 feet tall, which overhang my property. I'm not sure if the trees are his, mine, or both of ours because the lot boundary is a bit uncertain. These nasty trees drop lots of debris on my property. Also, I am worried that a serious storm could blow them over on my house. What should I do? -- Hugo R.
DEAR HUGO: Determine where the lot line is located. A professional survey might be necessary.
If there is evidence the trees are diseased or pose a serious threat of damage to your house, a friendly conference with your neighbor is appropriate.
If the trees belong to the neighbor, he or she has no liability to you for removal of the debris which falls from those overhanging trees. Consult a lawyer for details.
DEAR BOB: I am on the board of directors of my condo homeowners association. When I was asked to run for election, I considered it an honor. Because of my legal and business background, I felt I could contribute. But now that I've been on the board for about eight months, I consider it a curse. I will not run for re-election. Most of our 78 condo owners are wonderful people. But three or four are horrible. One is suing the association for refusal to repair her kitchen floor and cabinet when her kitchen plumbing sprang a leak within her condo unit. This is clearly her responsibility, not the association's. But she is suing her own association for the $7,500 repairs to her floor and cabinets. To defend this groundless case, we had to hire a lawyer at about $200 per hour. Why would she sue us? -- Edward G.
DEAR EDWARD: Now you know what a thankless job condo homeowner association directors often have. However, many condo associations never encounter hostile owners such as the one you describe.
Some condo owners have a bad attitude toward their homeowners associations, feeling it is "me" against "them." There could be lots of reasons for the lawsuit, including mental instability.
Congratulations to your condo association for defending against that groundless lawsuit rather than paying a claim for which there is clearly no association liability. I am surprised any ethical lawyer would even file that suit.
DEAR BOB: You recently had an item about the advantages of a revocable living trust. I showed it to my lawyer, who said that any estate that is less than $600,000, as mine is, doesn't need a living trust. Do you agree? -- Herbert S.
DEAR HERBERT: No. Most states have statutes exempting small estates, usually less than $100,000, from costly probate court expenses and delays. I have no clue where your attorney came up with that $600,000 net asset number.
The primary purpose of a revocable living trust is to avoid probate costs and delays after you die. A secondary advantage is to provide for the situation where the principal trustor becomes incapacitated, such as with a severe stroke or Alzheimer's disease.
In my opinion, everyone who owns a house or condo, and other significant assets such as stocks, bonds and investment real estate, needs a revocable living trust to avoid probate. Perhaps your attorney just wanted to probate your assets when you pass on so he could receive substantial fees then.
DEAR BOB: My husband and I file separate tax returns. My tax adviser says I cannot deduct the tax loss from depreciation on my rental property because I am married and filing a separate tax return. Is this true? -- Cynthia L.
DEAR CYNTHIA: No, but there might be another tax reason. I suggest you seek a second opinion from another tax adviser.
Your adviser might be correct. To illustrate, if you earn more than $150,000 adjusted gross income, then your passive activity tax loss from the rental property cannot be deducted from your ordinary taxable income. However, it then can be "suspended" for future use, such as when you sell the property to reduce your capital gains tax.
Ask your tax adviser for details about why he thinks your tax loss from your separate rental property is not deductible against your ordinary income. I suspect the reason is not because you and your husband file separate tax returns.
Readers with questions should write Robert J. Bruss at 251 Park Road, Burlingame, Calif. 94010, or contact him via his Web page, www.bobbruss.com.
(c) 2005, Inman News Service