QUESTION

Can another transfer their interest before death?

Asked on Jul 12th, 2013 on Estate Planning - North Carolina
More details to this question:
Maybe I need to explain more, because I have gotten so many yes and so many nos. Property was bought by mother and father tenancy by entirieres, joint tenancy with rights of survivorship with daughter, rights to surivorshiop. All at the same time, Father died. Can mother transfer her share as a gift before she dies to someone else? Does she have a share to gift to someone else? Pennsylvania.
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2 ANSWERS

Criminal Law Attorney serving Munhall, PA
Partner at Pelger Law
3 Awards
Does mom own her half outright or is she a JTWROS with daughter. I am leaning toward she owns it with daughter JTWROS, but would need to check.
Answered on Jul 15th, 2013 at 1:16 AM

William R. Pelger, Attorney Munhall, Pennsylvania 412-461-1900

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If your mother and father owned land in Pennsylvania as a tenancy by the entireties (a form of ownership only available to married persons), then the land automatically would pass at your father's death to your mother. Your mother would then be free to do what she wished with the property - sell it, rent it or gift it if it is paid for and there are no mortgages/liens. However you seem to suggest that a daughter was in the picture. If that was the case, there was no tenancy by the entireties; rather, the property was owned by your mother, father and the daughter as joint tenants with right of survivorship. In that case, once your father died, the land would still be owned as a joint tenancy with right of survivorship between your mother and her daughter. Its my understanding that a joint tenant can transfer their portion of the property to anyone else. So in that case, your mother could transfer her share of the property to someone else who would then own a joint tenancy with the daughter. I am concerned though about your mother gifting the property at this stage of her life. From a tax standpoint, its better that any heirs acquire the land by inheritance. A person is only allowed to gift up to $13,000 per year free of gift tax. Anything over that would be subject to tax or count towards the lifetime exclusion. I do not know how much of an issue this would or would not be because I don't know what else your mother owns. Also, there are tax consequences for the beneficiaries. If the land is inherited, the beneficiary gets what is called a stepped up basis - meaning that whatever the property is worth at the date of death. If the beneficiary later sells the land for a little more, there will be a small capital gains tax. However, if the property is gifted during life, the beneficiary gets whatever basis your mother had in the property. If your parents bought the land a long time ago, the property has probably increased a lot in value, in which case if the beneficiary later sold the land they would be looking at a much bigger portion being paid in capital gains tax. Note of caution - I am not a tax attorney and this is not tax advice. However, your mother should discuss the tax consequences with a tax professional before making any transfer. While the tax issues may or may be of concern, more of concern is the fact that your mother may be elderly. Is she receiving Medicaid (not Medicare) or will she be likely to receive Medicaid in the next 5 years? If so, then your mother should not gift the property because she will be ineligible to keep getting Medicaid. If she is not on Medicaid now, Medicaid will look back in time from the date on which an application is submitted. They will go back 5 years to see if the person gave away any property and if so they will declare the person ineligible for the remainder of that 5 year period. Nursing home care is very very expensive so if your mother is in ill health and on Medicaid or will be needing it soon then I would suggest that she refrain from gifting the property. Your mother needs to sit down with an estate planning attorney/elder care attorney if she has not already done so. The attorney can review all of your mother's assets, including the deed to the property, and devise a plan to reduce taxes and preserve her Medicaid eligibility if this is a concern. If your mother is young enough, there are things which can be done (Medicaid planning or getting long term care insurance). Your mother also needs a health care power of attorney, living will and financial power of attorney too.
Answered on Jul 15th, 2013 at 1:15 AM

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