Q: My aunt wants to sign her home over to me so I don’t have to wait while probate court works through her estate.
But in doing some research, I’ve found she owes the state money for state homecare services and her caseworker told me these funds will be taken out from the sale of her home when she passes on.
Will I be liable for these expenses if I agree to put her home in my name? Can the state stop her from signing over her home to me?
A: If your aunt wants to sign over the house to you to avoid paying what she owes to the state, it might be considered a fraudulent transfer. If her estate is sued for fraud, then the transfer of title can be unwound after she dies and you could also be in trouble if you are found to have aided her in this fraud. You may be found to owe the state the money that your aunt owed.
Probate isn’t so awful it should drive you to fraud. There are, instead, better ways to handle this situation.
First, it’s possible that the state has placed a lien against your aunt’s property for the funds she owes them for her home health care. Whenever the house is sold, the lien would have to be paid off first, out of the proceeds of the sale. You can check to see if any liens have been filed against the property at your local recorder of deeds office.
Now, let’s talk about you. You could simply purchase your aunt’s home from her today, and she could use the proceeds from the sale (whatever sales price you and she agree on that is reasonable) to pay off these debts she owes. She could then rent back the house from you for some nominal sum, or enough to pay whatever carrying costs you have for the property.
If her finances won’t permit that, then consider putting the property into a trust that names you the beneficiary. After she dies, the trust could sell the property, pay off her debts, and you would receive the proceeds. At least that way, you’d avoid probate court.
Finally, if your aunt needs extra income to live on, and her house is paid off, consider getting a reverse mortgage. Your aunt would not have to pay anything back on the reverse mortgage until after she either sells the home, or dies.
Please talk to an estate attorney about your options.
June 17, 2005.
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