Q: My husband and I refinanced my grandparents’ house because they had a reverse mortgage. My grandma had passed away and my grandpa was going through dementia, so we told him we would keep his name on the mortgage and the deed because he kept thinking he was going to have to move.

This happened in May 2018, and he passed away in April 2019. We are planning on renting out the property, but now my aunt (their daughter) is saying she has some claim to the house.

We have paid for this home for over a year and allowed my grandpa and my other aunt to stay in it rent-free. My husband’s and grandpa’s names are on the deed. What kind of claim over the home does my aunt have, if any?

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A: The operative words of your letter are in the first sentence: The home was your grandparents' home. It doesn't appear it has ever been yours. Yes, you've paid expenses and financed the property into your name; but that isn't the same thing as ownership. It just means you have the legal liability and obligation to pay the mortgage.

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Your grandparents had a reverse mortgage on the property. That means when the last of your grandparents moved out of the home permanently (either because they died or because they moved into someone else’s home or they bought another property), the reverse mortgage would have to be paid off. If, after they died, your grandparents’ home was sold and there had been money left over after paying off the reverse mortgage lender and paying for all closing costs, that residual cash would be considered part of your grandparents’ estate. Their property.

In the meantime, you came in and helped your grandparents refinance the home. Why did you do that? You didn’t write an explanation in your email, so that’s an open question, but we have some ideas. Perhaps your grandfather was having difficulties paying his bills and his living expenses, or perhaps the property needed work and there wasn’t enough equity in the home. The open questions are around what explicit financial assistance he needed, what equity he had in the home, and whether he had the mental capacity to understand what was going on when you initiated the refinance.

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Given all of these issues, questions and possible scenarios, it's difficult to figure out exactly why you might have stepped in to refinance the property (maybe you simply didn't want to have it sold) when some of those scenarios might have been contrary to the best interests of the elderly person living in the home.

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The best case scenario is that you were truly helping an elderly family member who was in financial need. In that vein, you were able to use your credit history to refinance the home, pay off the reverse mortgage and take equity out of the home to pay for your grandpa’s housing and other expenses. If you simply used the refinance money to pay off the reverse mortgage and then paid all of the housing expenses, you may have been doing your grandpa a great favor.

Unfortunately, we don't know why you just didn't give your grandpa money to pay his expenses. If you had, when your grandpa died the home would have been sold, the proceeds from the sale would have paid off the reverse mortgage and the leftover money would have gone to your grandpa's heirs as designated in his will or as set forth under state law.

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If your husband and grandpa jointly owned the house with rights of survivorship, then the home would have automatically gone to your husband upon your grandpa's death. If your husband and grandpa owned it as tenants in common, your grandpa's shares would be divided among his heirs; unless he had a valid will, in which case all of his property would be divided according to the terms of the document.

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It’s a thorny situation. If your grandpa died owning all of the home, and your aunt was due to inherit the home or some of the equity in the home, she may be feeling as though you came in and convinced your grandpa to sign away his home to your husband in a way that wasn’t proper. That might explain why she feels she has a claim on the property. If he left a will, and it stated that the home or part of his estate would go to his sister, that would also explain her claim to the property. And it could be that she just feels she’s owed something, either because she was living there or because she helped take care of her dad.

We've seen this movie before, and it rarely has a happy ending. Typically, families fight over the assets until there is little or nothing left.

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When there are elderly relatives who may have Alzheimer’s, dementia or other issues that impair their ability to take care of their financial affairs, it’s best to make sure you hire an attorney who can go over the documentation, understand the family dynamics and be as transparent as possible, so no one can come in later on and claim that you took advantage of the situation.

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For further information and some next steps, please talk to an estate planning attorney.

Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the chief executive of Best Money Moves, an app that employers provide to employees to measure and dial down financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact them through her website, ThinkGlink.com.

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