Property ownership/title headaches...options

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Derpalator
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Re: Property ownership/title headaches...options

Post by Derpalator »

bbrock wrote: Wed Jan 12, 2022 10:38 am
Good Listener wrote: Tue Jan 11, 2022 7:10 pm
bbrock wrote: Tue Jan 11, 2022 2:30 pm Because our boys and us like going to the property.
I would sell it and then buy a very similar one near there if it is so critical for you. I have a feeling in a few years your boys couldn't care less about it.
Thank you good listener. Yes the boys are eight years old right now. They love going up there. But I do agree probably come the teenage years they may want to do other things. Especially as there’s no Wi-Fi at the cabin, they won’t like that later on.
Global, low earth orbiting satellites will be providing low latency, reasonably priced internet on a wide scale soon. So currently for the price of a satellite receiver, internet service is available. For example, on extended vacation to Antartica recently, DW and I did our first sale of bonds to fund retirement from my phone, and the order (a market order) was filled and confirmed instantaneously, just like being at home.
dknightd
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Re: Property ownership/title headaches...options

Post by dknightd »

I only skimmed this thread, sorry, but will add my $.03 ($.02 plus inflation ;) anyway.
I assume the nephews are your kids? Or are there other nephews?
Your brother seems to have no interest in the property. You do have interest. Might as well let him give it to you now. Then he does not have to worry about not contributing to upkeep and taxes in the past or in the future. He is also off the hook for any liability the property might generate in the future.
Win win!
The title problem goes away, and he does not have to feel guilty about not helping maintain a property he partially owns, but has no interest in. It simplifies things for him, and for you.
If there are other nephews, things get more complicated . . .
My advice is worth exactly what you paid for it.
Retired 2019. So far, so good. I want to wake up every morning. But I want to die in my sleep. Just another conundrum. I think the solution might be afternoon naps ;)
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bbrock
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Re: Property ownership/title headaches...options

Post by bbrock »

celia wrote: Sun Jan 16, 2022 12:25 am
bbrock wrote: Tue Jan 11, 2022 12:59 pm This is surfacing b/c my wife and I are estate planning. We have elementary school age children. My brother has no kids. The joint titling is not something that I want my wife to have to deal with if I die first. As it stands, my brother has written in emails that he has no interest in the property and his half is to go to his nephews.
. . . Neither my wife nor I want our nephews on title when they turn 18 b/c child owned assets would adversely impact their future college financial aid.
Are the nephews your brother is referring to the same as your sons? I was assuming they might be from SIL’s side, because you would refer to your sons as “sons” instead. If they are your’s, why are you referring to them as “nephews”? If they are not your kids, why are you worrying about college financial aid for another family, other than to be considerate?
bbrock wrote: Thu Jan 13, 2022 4:19 pm
SuzBanyan wrote: Thu Jan 13, 2022 3:40 pm If your brother is willing to gift it to you now, don’t kick the can down the road. If he only changes title to TOD your sons, he could change it again tomorrow or your son’s could inherit as minors. A contract to gift in the future is only helpful if you would and could sue your brother to enforce it.
So you don’t think Suz that kicking the can down the road to avoid increased prop taxes would be preferential?

Yes, I just thought about it and was going to get back to this post. The inheritance as minors is a problem. If the TOD is our sons and he dies and they inherit when they’re minors, that is a whole problem. Can he put a TOD as the trust I’m establishing with my wife?

Also, if he does die, and the children inherit as minors (guardianship? Would someone be a trustee in that situation?) or when they turn 18, that is adversely going to affect their future financial aid. That is why my wife and I are being careful to make sure as few assets are possible are in their names come time to apply for college financial aid. But that’s a topic for another discussion.
Leaving assets to minors has it’s own pitfalls. Here’s an older thread about Inheritance on Behalf of Minor Children that you should read.

And if brother changes the deed to his name and TOD <OP and OP’s wife’s trust>, he is giving it to you and your wife AFTER HE DIES as well as keeping the right to change the TOD in the future. This would still keep your estate planning messy. Why don’t you suggest he deed it to you and tell him you are in the process of getting a trust where after both you and your wife have died, your sons can fight over it can decide what makes most sense for them at the time they inherit. Maybe one will want it and one won't. Or one could marry and want to move towards his wife's family. Or a thousand other things could happen.
Good catch Celia. Typo. Yes, it’s was to read sons. “Neither my wife nor I want our sons…”

Which were you really implying… our sons can fight over it or decide what makes sense? Why the strike through? If we can’t get it decided right, you are right they could end up fighting over it unless our trust instructs the property to be sold upon the death of the surviving trustee.

No we did not have an agreement for what happens if the property is only partly used. If someone was living up there full-time he would assume all costs. If it was used part time or vacant, the costs would be split.

On a technicality, yes you are correct on commingled money and opening up a possible claim in a divorce settlement. But I will say that’s a topic for another discussion. I appreciate you though bringing that up.
bbrock
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bbrock
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Re: Property ownership/title headaches...options

Post by bbrock »

celia wrote: Sun Jan 16, 2022 12:10 am I first would like to know what the current deed says, as that determines who legally owns the property.
bbrock wrote: Tue Jan 11, 2022 12:59 pm I have been grappling for years with an unresolved situation. My brother and I were beneficiaries of a small mountain cabin. Originally, the two of us owned as tenants in common 50/50, but in 2011 he added his share to his trust which is under his and his wife's name.
bbrock wrote: Thu Jan 13, 2022 3:20 pm
CAsage wrote: Thu Jan 13, 2022 2:58 pm Could you ask your brother to change his half title back to "Brother TOD Nephews A&B"? That would defer any property tax increase, and kick the whether to sell down the line. And you would get a capital gains bump on it when they inherit. Assuming you outlive your brother....
CASage, thanks for responding. You hit the nail on the head. That is exactly what I am thinking versus assuming sole ownership of the title or having him give his half to my wife.
Does the latest deed say:
bbrock and <brother>, Tenants In Common
bbrock, <brother>, and <SIL>, Tenants In Common
bbrock and <brother and SIL living trust>, Tenants In Common
or somethng else? I’ll bet the deed hasn’t been changed yet but your brother’s trust (with his wife) is just the catch-all for his will that says anything of his not titled in the trust goes into the trust, when he dies. If that is the case, your SIL doesn’t own any of the property until he dies.
TropikThunder wrote: Thu Jan 13, 2022 5:50 pm OP's brother can't just give away SIL's share of the house, can he? Does it being in a trust change things? I know property inherited by one spouse is separate property unless co-mingled with shared property (like if you deposit a cash inheritance into a joint account, it is now shared). Has brother made his share community property by placing it in a joint trust?
That would be the case only if the deed is titled as:
bbrock and <trust>, Tenants In Common.
Me 50% tenancy in common
Brother family trust 50% tenancy in commons
bbrock
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bbrock
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Re: Property ownership/title headaches...options

Post by bbrock »

dknightd wrote: Sun Jan 16, 2022 7:32 am I only skimmed this thread, sorry, but will add my $.03 ($.02 plus inflation ;) anyway.
I assume the nephews are your kids? Or are there other nephews?
Your brother seems to have no interest in the property. You do have interest. Might as well let him give it to you now. Then he does not have to worry about not contributing to upkeep and taxes in the past or in the future. He is also off the hook for any liability the property might generate in the future.
Win win!
The title problem goes away, and he does not have to feel guilty about not helping maintain a property he partially owns, but has no interest in. It simplifies things for him, and for you.
If there are other nephews, things get more complicated . . .
My advice is worth exactly what you paid for it.
Yes our sons. Sorry for any confusion. Fixing that typo now.
bbrock
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bbrock
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Re: Property ownership/title headaches...options

Post by bbrock »

Derpalator wrote: Sun Jan 16, 2022 2:49 am
bbrock wrote: Wed Jan 12, 2022 10:38 am
Good Listener wrote: Tue Jan 11, 2022 7:10 pm
bbrock wrote: Tue Jan 11, 2022 2:30 pm Because our boys and us like going to the property.
I would sell it and then buy a very similar one near there if it is so critical for you. I have a feeling in a few years your boys couldn't care less about it.
Thank you good listener. Yes the boys are eight years old right now. They love going up there. But I do agree probably come the teenage years they may want to do other things. Especially as there’s no Wi-Fi at the cabin, they won’t like that later on.
Global, low earth orbiting satellites will be providing low latency, reasonably priced internet on a wide scale soon. So currently for the price of a satellite receiver, internet service is available. For example, on extended vacation to Antartica recently, DW and I did our first sale of bonds to fund retirement from my phone, and the order (a market order) was filled and confirmed instantaneously, just like being at home.
Sounds satirical.
bbrock
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bbrock
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Re: Property ownership/title headaches...options

Post by bbrock »

dknightd wrote: Sun Jan 16, 2022 7:32 am I only skimmed this thread, sorry, but will add my $.03 ($.02 plus inflation ;) anyway.
I assume the nephews are your kids? Or are there other nephews?
Your brother seems to have no interest in the property. You do have interest. Might as well let him give it to you now. Then he does not have to worry about not contributing to upkeep and taxes in the past or in the future. He is also off the hook for any liability the property might generate in the future.
Win win!
The title problem goes away, and he does not have to feel guilty about not helping maintain a property he partially owns, but has no interest in. It simplifies things for him, and for you.
If there are other nephews, things get more complicated . . .
My advice is worth exactly what you paid for it.
Thx dknightd for your “inflation-adjusted” input
bbrock
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bbrock
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Re: Property ownership/title headaches...options

Post by bbrock »

celia wrote: Sun Jan 16, 2022 12:25 am
bbrock wrote: Tue Jan 11, 2022 12:59 pm This is surfacing b/c my wife and I are estate planning. We have elementary school age children. My brother has no kids. The joint titling is not something that I want my wife to have to deal with if I die first. As it stands, my brother has written in emails that he has no interest in the property and his half is to go to his nephews.
. . . Neither my wife nor I want our nephews on title when they turn 18 b/c child owned assets would adversely impact their future college financial aid.
Are the nephews your brother is referring to the same as your sons? I was assuming they might be from SIL’s side, because you would refer to your sons as “sons” instead. If they are your’s, why are you referring to them as “nephews”? If they are not your kids, why are you worrying about college financial aid for another family, other than to be considerate?
bbrock wrote: Thu Jan 13, 2022 4:19 pm
SuzBanyan wrote: Thu Jan 13, 2022 3:40 pm If your brother is willing to gift it to you now, don’t kick the can down the road. If he only changes title to TOD your sons, he could change it again tomorrow or your son’s could inherit as minors. A contract to gift in the future is only helpful if you would and could sue your brother to enforce it.
So you don’t think Suz that kicking the can down the road to avoid increased prop taxes would be preferential?

Yes, I just thought about it and was going to get back to this post. The inheritance as minors is a problem. If the TOD is our sons and he dies and they inherit when they’re minors, that is a whole problem. Can he put a TOD as the trust I’m establishing with my wife?

Also, if he does die, and the children inherit as minors (guardianship? Would someone be a trustee in that situation?) or when they turn 18, that is adversely going to affect their future financial aid. That is why my wife and I are being careful to make sure as few assets are possible are in their names come time to apply for college financial aid. But that’s a topic for another discussion.
Leaving assets to minors has it’s own pitfalls. Here’s an older thread about Inheritance on Behalf of Minor Children that you should read.

And if brother changes the deed to his name and TOD <OP and OP’s wife’s trust>, he is giving it to you and your wife AFTER HE DIES as well as keeping the right to change the TOD in the future. This would still keep your estate planning messy. Why don’t you suggest he deed it to you and tell him you are in the process of getting a trust where after both you and your wife have died, your sons can fight over it can decide what makes most sense for them at the time they inherit. Maybe one will want it and one won't. Or one could marry and want to move towards his wife's family. Or a thousand other things could happen.
I’ll check out that link. Thanks.
bbrock
5outof10
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Re: Property ownership/title headaches...options

Post by 5outof10 »

I am not the sharpest tool in the shed so take this with a grain of salt but when it comes to divying up inheritances one in the hand is often better than two in the bush.

Meaning, I would get the property in my name now and worry about avoiding financial aid ramifications later. You and your spouse can at least control that on your own...once the property is in your names.

Otherwise, if your brother dies before his spouse I just see this ending up in a partition action, an overpriced purchase of brother's 1/2, or an estate planning litigation against your SIL.

To me $3,000/year (if it is indeed that high) is a small price to pay for FULL control of this particular asset.

(Hell, $3,000/year to not have to think about SIL again...)
Checking 10K, Sinking Funds 50K (HYSA/MMF), EF 50K (I bonds), Taxable/Retirement: 72% VTI, 18% VXUS, 10% BND | I would like to own a gold bar one day, to be able to say I own a gold bar.
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celia
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Re: Property ownership/title headaches...options

Post by celia »

bbrock wrote: Sun Jan 16, 2022 6:47 pm Which were you really implying… our sons can fight over it or decide what makes sense? Why the strike through? If we can’t get it decided right, you are right they could end up fighting over it unless our trust instructs the property to be sold upon the death of the surviving trustee.
The strikeout was meant as a joke. Sorry, if it didn’t come out that way. It seems your sons inheriting it would be similar to how you and your brother inherited the cabin. But your kids still have a long time until that probably happens. A lot can happen between now and then.

One problem with the property being in your sons’ names when they are young (or any age for that matter) is the possibility of being sued if they caused a car accident. The more people who are co-owners, the greater the probability that can happen. Lawyers will tend to go to where the assets are.

On a technicality, yes you are correct on commingled money and opening up a possible claim in a divorce settlement. But I will say that’s a topic for another discussion. I appreciate you though bringing that up.
Some of my points, like this one, are things that a good estate planning lawyer will bring up. The more you can learn ahead of time, the easier it will be to answer the questions and make decisions to be incorporated in your wills and trust(s).
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bbrock
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Re: Property ownership/title headaches...options

Post by bbrock »

celia wrote: Mon Jan 17, 2022 2:15 am
bbrock wrote: Sun Jan 16, 2022 6:47 pm Which were you really implying… our sons can fight over it or decide what makes sense? Why the strike through? If we can’t get it decided right, you are right they could end up fighting over it unless our trust instructs the property to be sold upon the death of the surviving trustee.
The strikeout was meant as a joke. Sorry, if it didn’t come out that way. It seems your sons inheriting it would be similar to how you and your brother inherited the cabin. But your kids still have a long time until that probably happens. A lot can happen between now and then.

One problem with the property being in your sons’ names when they are young (or any age for that matter) is the possibility of being sued if they caused a car accident. The more people who are co-owners, the greater the probability that can happen. Lawyers will tend to go to where the assets are.

On a technicality, yes you are correct on commingled money and opening up a possible claim in a divorce settlement. But I will say that’s a topic for another discussion. I appreciate you though bringing that up.
Some of my points, like this one, are things that a good estate planning lawyer will bring up. The more you can learn ahead of time, the easier it will be to answer the questions and make decisions to be incorporated in your wills and trust(s).
Got it Celia. Thanks for clarifying.

Didn’t think about the liability problem with our boys being on title, but I see that as a very valid point. Good food for thought. Thanks.

In relating to your last point, well that then makes the case that if my brother does transfer his half title to us, then I might as well retitle my share from separate property to CPWROS in our trust. To tell you the truth I’m not sure how that would get titled exactly if I did intend to just make it community property. If I recall, I think it is stated in the trust that property is treated as community property and then the titling on the deed states our trust name.
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Re: Property ownership/title headaches...options

Post by bbrock »

5outof10 wrote: Sun Jan 16, 2022 11:10 pm I am not the sharpest tool in the shed so take this with a grain of salt but when it comes to divying up inheritances one in the hand is often better than two in the bush.

Meaning, I would get the property in my name now and worry about avoiding financial aid ramifications later. You and your spouse can at least control that on your own...once the property is in your names.

Otherwise, if your brother dies before his spouse I just see this ending up in a partition action, an overpriced purchase of brother's 1/2, or an estate planning litigation against your SIL.

To me $3,000/year (if it is indeed that high) is a small price to pay for FULL control of this particular asset.

(Hell, $3,000/year to not have to think about SIL again...)
Thanks for your input 5outof10. You painted the exact scenario that I wish to avoid if my brother dies first. Yikes.
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celia
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Re: Property ownership/title headaches...options

Post by celia »

bbrock wrote: Mon Jan 17, 2022 12:18 pm In relating to your last point, well that then makes the case that if my brother does transfer his half title to us, then I might as well retitle my share from separate property to CPWROS in our trust. To tell you the truth I’m not sure how that would get titled exactly if I did intend to just make it community property. If I recall, I think it is stated in the trust that property is treated as community property and then the titling on the deed states our trust name.
If you have some reason to keep the cabin property in just your name and don't want to change your trust, after your brother deeds his share to you (alone), you could title the property as:
<trust>, Separate Property of bbrock

The deed would have preference over what the trust says, I would think, since they are contradicting each other. But then the trust should say what happens to each of your (bbrock and DW) separate property when each of you die. Best to run this by your trust lawyer.

DH and I each have inherited property that we've kept "separate" so we can leave it to whomever we want. In my case, I am leaving part of mine to relatives on my side of the family since that's where the money came from.
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bbrock
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Re: Property ownership/title headaches...options

Post by bbrock »

Thx for your reply Celia.

If/win we take full title to the property, and if I take sole title, I’m on the fence with regards to keeping as property as separate property versus retitling it to community property. Even when this issue first serviced during estate planning, I had the same thoughts the first time I learned about the fact that I have been using commingled money to pay for expenses at this property.

The reason I thought to go to community property is simply because of the step up in cost basis if I predecease my wife. Main reason I thought to keep it as separate property, is in the event of a divorce that I have a separate property. However I already know she could make a small claim to the property based on the use of commingled money. There are valid reasons to go either way. But perhaps if I am protecting myself for what if scenarios, then maybe that means I’m not fully vesting myself in my current situation.

Question: whether my brother’s half is gifted to my wife alone, me, or the two of us equally, reassessment would be the same, correct?
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Re: Property ownership/title headaches...options

Post by bbrock »

Good afternoon Bogleheads. To make sure I’m understanding this right with regards to cost basis, if my brother transfers his share of the title to me, us (wife and me), or our children, the cost basis on his half stays the same, correct? Which would be the cost basis of when we took ownership of the property from my father?
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Bob Loblaw
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Re: Property ownership/title headaches...options

Post by Bob Loblaw »

bbrock wrote: Wed Jan 19, 2022 2:39 pm Good afternoon Bogleheads. To make sure I’m understanding this right with regards to cost basis, if my brother transfers his share of the title to me, us (wife and me), or our children, the cost basis on his half stays the same, correct? Which would be the cost basis of when we took ownership of the property from my father?
Well, yes, his cost basis remains the same -- the assessed value was set when you and your brother took ownership.

However, the assessed value will change. Your half stays the same per Prop 13 (plus, annual inflation of no more than 2%). His half would reassess as of the date of transfer/recordation. The whole property would go through an appraisal (typically just a desktop appraisal) in the Assessor's office (because half-interests are typically not sold on the open market), and then 50% of that determined market value would get added to your Prop 13 protected 50%.
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Re: Property ownership/title headaches...options

Post by Dottie57 »

I think the cleanest and fairest to both parties is to sell the property. Receiving half as a gift from brother andthen selling in 5 years can cause resentment and drama.

I come down on doing what is best for family relations, not what is best for wallet.
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Re: Property ownership/title headaches...options

Post by bbrock »

Bob Loblaw wrote: Fri Jan 21, 2022 10:45 am
bbrock wrote: Wed Jan 19, 2022 2:39 pm Good afternoon Bogleheads. To make sure I’m understanding this right with regards to cost basis, if my brother transfers his share of the title to me, us (wife and me), or our children, the cost basis on his half stays the same, correct? Which would be the cost basis of when we took ownership of the property from my father?
Well, yes, his cost basis remains the same -- the assessed value was set when you and your brother took ownership.

However, the assessed value will change. Your half stays the same per Prop 13 (plus, annual inflation of no more than 2%). His half would reassess as of the date of transfer/recordation. The whole property would go through an appraisal (typically just a desktop appraisal) in the Assessor's office (because half-interests are typically not sold on the open market), and then 50% of that determined market value would get added to your Prop 13 protected 50%.
Good morning Bob. You have clearly explained this. Thank you so much. Well understood.
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Re: Property ownership/title headaches...options

Post by bbrock »

Dottie57 wrote: Fri Jan 21, 2022 11:03 am I think the cleanest and fairest to both parties is to sell the property. Receiving half as a gift from brother andthen selling in 5 years can cause resentment and drama.

I come down on doing what is best for family relations, not what is best for wallet.
Thx for your input Dottie. An argument for family relations could go many ways - relinquish your half to the other side who uses it? Gift it? Sell it? Sell the whole property?

Also, not paying for maintenance/expenses when the property has been vacated despite having a prior agreement upon that could cause resentment and strain family relations.

Relations have already been strained unfortunately.
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celia
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Re: Property ownership/title headaches...options

Post by celia »

bbrock wrote: Tue Jan 18, 2022 1:05 pm Thx for your reply Celia.

If/win we take full title to the property, and if I take sole title, I’m on the fence with regards to keeping as property as separate property versus retitling it to community property. Even when this issue first serviced during estate planning, I had the same thoughts the first time I learned about the fact that I have been using commingled money to pay for expenses at this property.
If the property is deeded to you alone, you could always change it to community property or joint trust without a re-assessment. But going the other direction could be complicated.

If your dad also left you other assets that can be identified this late and liquidated, could you use that for cabin costs? If you turned them into community property, that is unfortunate, but could be discussed with DW.
The reason I thought to go to community property is simply because of the step up in cost basis if I predecease my wife.
You would get a step-up either way, owning it jointly or alone. The difference here is that if your wife is a co-owner, if she dies first, it will get a step-up, but not if you alone own it.
Main reason I thought to keep it as separate property, is in the event of a divorce that I have a separate property. However I already know she could make a small claim to the property based on the use of commingled money. There are valid reasons to go either way. But perhaps if I am protecting myself for what if scenarios, then maybe that means I’m not fully vesting myself in my current situation.
I suggest talking about potential re-titling with your wife and get feedback from her. Part of it would be to guess if she might inherit in the future and want to be able to hold her assets separate too. Obviously, this depends on the makeup of her extended family vs yours.

I inherited from an aunt about 15 years ago and kept the assets separate, partly because I wanted to be able to use those assets to help family members on that side of the family without using joint money. I was also trustee and very efficient in cleaning things up (for more than 4 beneficiaries). DH and I didn’t talk about separate assets back then, but we should have. (I have the advantage of being more knowledgable about trusts and taxes and he knows that.) At the time, DH’s parents said to not count on any assets from them since they were giving it all to charity, so we didn’t. (I sort of didn’t believe it since they had a very disabled grandchild that most (but not all) of their adult kids wouldn’t have minded having their assets put in a trust for her.

Fast forward and he got a larger inheritance from his parents, which I encouraged him to keep separate and even leave it in trust to the granddaughter if he wants. Meanwhile, I am in the middle of inheriting from a parent who died last year and another relative is in hospice. We see this money as just giving us more options to do what we each think is the right thing to do and we respect each other’s choices as it was never community property.
Question: whether my brother’s half is gifted to my wife alone, me, or the two of us equally, reassessment would be the same, correct?
Yes, property taxes will be adjusted so half the property has the old taxes and half the property has new taxes, regardless of who now owns the “new” half.
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Re: Property ownership/title headaches...options

Post by epictetus »

i would suggest buying out his half and having it officially/legally noted re: paperwork, signatures, deed, whatever that you or you and your wife are the sole owners. or selling this cabin and splitting the proceeds 50/50 with him.

either action will end the issue and should reduce the chance you have any future problems.

from your description you can already see lots of ways this can go sour. why keep considering all those complicated options?

it is irritating to you he has not paid for upkeep, etc. for 10 years. i would suggest just accepting that irritation and moving on.

go for the simple option. either buying him out or selling the cabin and splitting the proceeds 50/50 will be the most fair to him/his family, will reduce/eliminate the chance your SIL tries to interfere at some future point, and will resolve the issue for you and your family.
Focus on what you can control
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Re: Property ownership/title headaches...options

Post by bbrock »

celia wrote: Sat Jan 22, 2022 2:35 pm
bbrock wrote: Tue Jan 18, 2022 1:05 pm Thx for your reply Celia.

If/win we take full title to the property, and if I take sole title, I’m on the fence with regards to keeping as property as separate property versus retitling it to community property. Even when this issue first serviced during estate planning, I had the same thoughts the first time I learned about the fact that I have been using commingled money to pay for expenses at this property.
If the property is deeded to you alone, you could always change it to community property or joint trust without a re-assessment. But going the other direction could be complicated.

If your dad also left you other assets that can be identified this late and liquidated, could you use that for cabin costs? If you turned them into community property, that is unfortunate, but could be discussed with DW.
The reason I thought to go to community property is simply because of the step up in cost basis if I predecease my wife.
You would get a step-up either way, owning it jointly or alone. The difference here is that if your wife is a co-owner, if she dies first, it will get a step-up, but not if you alone own it.
Main reason I thought to keep it as separate property, is in the event of a divorce that I have a separate property. However I already know she could make a small claim to the property based on the use of commingled money. There are valid reasons to go either way. But perhaps if I am protecting myself for what if scenarios, then maybe that means I’m not fully vesting myself in my current situation.
I suggest talking about potential re-titling with your wife and get feedback from her. Part of it would be to guess if she might inherit in the future and want to be able to hold her assets separate too. Obviously, this depends on the makeup of her extended family vs yours.

I inherited from an aunt about 15 years ago and kept the assets separate, partly because I wanted to be able to use those assets to help family members on that side of the family without using joint money. I was also trustee and very efficient in cleaning things up (for more than 4 beneficiaries). DH and I didn’t talk about separate assets back then, but we should have. (I have the advantage of being more knowledgable about trusts and taxes and he knows that.) At the time, DH’s parents said to not count on any assets from them since they were giving it all to charity, so we didn’t. (I sort of didn’t believe it since they had a very disabled grandchild that most (but not all) of their adult kids wouldn’t have minded having their assets put in a trust for her.

Fast forward and he got a larger inheritance from his parents, which I encouraged him to keep separate and even leave it in trust to the granddaughter if he wants. Meanwhile, I am in the middle of inheriting from a parent who died last year and another relative is in hospice. We see this money as just giving us more options to do what we each think is the right thing to do and we respect each other’s choices as it was never community property.
Question: whether my brother’s half is gifted to my wife alone, me, or the two of us equally, reassessment would be the same, correct?
Yes, property taxes will be adjusted so half the property has the old taxes and half the property has new taxes, regardless of who now owns the “new” half.
Thx Celia for responding. I appreciate your input.

My wife will have to sort things out with inheritance among her three other siblings, but there is nothing to inherit from her mom, at least property wise.
bbrock
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bbrock
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Re: Property ownership/title headaches...options

Post by bbrock »

epictetus wrote: Sat Jan 22, 2022 2:44 pm i would suggest buying out his half and having it officially/legally noted re: paperwork, signatures, deed, whatever that you or you and your wife are the sole owners. or selling this cabin and splitting the proceeds 50/50 with him.

either action will end the issue and should reduce the chance you have any future problems.

from your description you can already see lots of ways this can go sour. why keep considering all those complicated options?

it is irritating to you he has not paid for upkeep, etc. for 10 years. i would suggest just accepting that irritation and moving on.

go for the simple option. either buying him out or selling the cabin and splitting the proceeds 50/50 will be the most fair to him/his family, will reduce/eliminate the chance your SIL tries to interfere at some future point, and will resolve the issue for you and your family.
Thx for your input epictetus.

Recently, I discussed with my brother the expenses going back 10+ yr and the prior verbal agreement we had before he was married and had lived in the cabin (prior to when I lived there for sometime). Of course, he understood things differently and remembers me saying "I'd pay all the expenses." Go figure. I am just going to have to write that one off.
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Re: Property ownership/title headaches...options

Post by bbrock »

He agreed to sign his half over to me. I informed him that would be the easiest and cleanest way so that the boys don't inherit when they are minors. Also, I informed him that if I keep it as separate property and I die, that it would be left to the trust, with my wife as the beneficiary. In the draft that our estate attorney prepared weeks back prior to this conversation with my brother, my instructions are for the cabin to be sold within 1 year of my death, and the proceeds to be paid to the trust.

Ultimately, I want my boys/family to enjoy this cabin and the time there, but I really want to avert another possible repeat of what has transpired between my brother and me. Additionally, as someone pointed our earlier, through not owning the cabin, they are free to explore and rent elsewhere with their future-family's (if that is what the course of the universe has for them). I really don't want them "tied down" or "burdened" with concerns over the cabin and maintenance.

If/when I pass, as for the proceeds, I will discuss with my wife to distribute the proceeds to the boys in one disbursement to each of them when they are finished with college, or in order to avoid using any of the lifetime gift tax exclusion, to distribute annual gifts to each of them up to the annual gift exclusion (until the gifts equal their share of the proceeds). Perhaps that is something that should be written into the trust, or at least on an instruction list for my wife.
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Re: Property ownership/title headaches...options

Post by Tubes »

Thanks for the update. It sounds like your brother's willingness to get out is as much of a relief for him too. Perhaps that is why he has been disengaged.

That was my sister's case. She just wanted to not worry about it. Then again, in my case, the property was worth less than $10k so it was small potatoes.
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Re: Property ownership/title headaches...options

Post by bbrock »

Re-read my post and figured I give some current updates:

Now, I am current the only one on title. It is my separate property, but I did have recorded a CA Transfer on Death Deed for the property to transfer to the trust my wife and I created upon my death. So, legally, things are good enough for now. I grappled a little with adding my DW to the title so we could own as community property and then I could benefit for the full step up if she passed first, but I figured things are good enough for now. I have definitely instructed her to sell it upon my passing so that she doesn't have the headache of the maintenance, etc.

To me, the maintenance and upkeep has become an issue. There is always something after every winter that needs to be repaired. We just made a couple hour trip up there recently as we flew down to the general area. The trip was designed for assessment of things I have to now take care of, and rest assured I now have added 3 things - 2 small items, 1 more larger project.

Personally, I am not wanting to dump more money beyond the basic repairs/improvements into it as it's our vacation home we don't use too often. Sure, would be nice to have things nicely improved, but if we were going to do that, we might as well use that $ to put some improvements into our main home first. Doing some improvements on this vacation home would not net us more $ if I was to sell it.

So, now I am really more serious than I every have been with the rent vs. sell debacle. Renting it not as a vacation (air bnb type) but to a full-time permanent resident. The County and area have major restrictions on air bnb type rentals and I would not want to deal with it. But, with renting, then I got to find a property manager, etc.

Selling would free me up (mentally at least) and then I could dump that $ aside in shorter/intermediate investments so that it is available for the boys in the future (education, housing, etc.; we already did a large 5 year contribution to their 529s when they were <1 yr). Plus, something Tubes said earlier would be nice that we are freed up to now travel/rent other places and not feel like I should be using our cabin.

Any input on how you decided if it was worth keeping your vacation home, selling, or renting it?
What factors did you weigh?
bbrock
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