Owning Property for Dummies?
January 30, 2012 8:50 AM Subscribe
My aging parents want to put their 160 acres (where we all live) in my name. I know nothing about owning property. I am in Oklahoma. What can I expect to have to pay? Are there any other ways this will affect me? YANMEstateL.
Not a real estate lawyer at all. But, if it's in your name, you'd be responsible for any real estate taxes; keeping insurance on the property if there is any/you want any (you probably do); and making sure it's kept in accordance with any ordinances (i.e. the buildings aren't falling down or whatever).
But the real reason you want to talk to the estate lawyer is to determine how this impacts you in the sense of taxes. If you parents just give you a land, is that income or a gift you have to pay taxes on? Does that only happen if you sell the land?
And, partly it depends on why they want to do this - to avoid taxes? to qualify for medicare? what's going on? It's possible that in some cases, this will be better handled through a trust or some other option. So, that's why you need to actually talk to an estate lawyer (or elder care lawyer, or real estate lawyer, depending on what you're trying to do here).
Or, OP, what felex said.
posted by dpx.mfx at 9:19 AM on January 30, 2012
But the real reason you want to talk to the estate lawyer is to determine how this impacts you in the sense of taxes. If you parents just give you a land, is that income or a gift you have to pay taxes on? Does that only happen if you sell the land?
And, partly it depends on why they want to do this - to avoid taxes? to qualify for medicare? what's going on? It's possible that in some cases, this will be better handled through a trust or some other option. So, that's why you need to actually talk to an estate lawyer (or elder care lawyer, or real estate lawyer, depending on what you're trying to do here).
Or, OP, what felex said.
posted by dpx.mfx at 9:19 AM on January 30, 2012
Best answer: Not sure if this is a house and land or just land. The difference would matter a little. You'll need to think about three main things: taxes, mortgage, liability
1. Taxes are usually property taxes, they are a fixed percentage and may be included in your mortgage if you have one. Ask your folks about this, they will know what the taxes are. This is one of those "you pay these or we repossess your house/land situations" They are usually set locally, to the best of my knowledge.
2. Mortgage. If your folks have one and you become the owner [i.e. putting your actual name on the deed, removing theirs] then you need to make mortgage payments and probably need to be able to qualify for a mortgage. This may be helpful, to do this while your folks are alive, because then you won't have the awkwardness of going through probate [where the house is owned by "the estate" for a year or more]. There are a few ways to own property in common and it's worth understanding exactly what your folks want to do here: put you on the deed as sole owner, put you on the deed as a tenant in common or put you on the deed as joint tenants with your folks. In a joint tenant situation if one person dies their share goes to the other person. In a tenants in common situation that share would go to that person's heirs. Big difference, potentially.
3. Insurance: you being the owner means you are liable for what happens to people on the property [i.e. someone falls in a hole & breaks their leg] and you may want to get insurance on the house if there is one [in case a storm blows the roof off] all of this can cost from a few hundred a year to a few thousand depending on the value of your property and how much insurance you think you need.
And yeah motivation is a big thing here too. Try to figure out what your parents are looking to solve problem-wise and you may have more of an idea of how this will affect you. You should also make sure that if this is some sort of deal you have with your folks [i.e. they will pay the bills while they are alive, then that responsibility passes to you] that you have that written down and preferably in some sort of legally binding way.
posted by jessamyn at 9:24 AM on January 30, 2012 [1 favorite]
1. Taxes are usually property taxes, they are a fixed percentage and may be included in your mortgage if you have one. Ask your folks about this, they will know what the taxes are. This is one of those "you pay these or we repossess your house/land situations" They are usually set locally, to the best of my knowledge.
2. Mortgage. If your folks have one and you become the owner [i.e. putting your actual name on the deed, removing theirs] then you need to make mortgage payments and probably need to be able to qualify for a mortgage. This may be helpful, to do this while your folks are alive, because then you won't have the awkwardness of going through probate [where the house is owned by "the estate" for a year or more]. There are a few ways to own property in common and it's worth understanding exactly what your folks want to do here: put you on the deed as sole owner, put you on the deed as a tenant in common or put you on the deed as joint tenants with your folks. In a joint tenant situation if one person dies their share goes to the other person. In a tenants in common situation that share would go to that person's heirs. Big difference, potentially.
3. Insurance: you being the owner means you are liable for what happens to people on the property [i.e. someone falls in a hole & breaks their leg] and you may want to get insurance on the house if there is one [in case a storm blows the roof off] all of this can cost from a few hundred a year to a few thousand depending on the value of your property and how much insurance you think you need.
And yeah motivation is a big thing here too. Try to figure out what your parents are looking to solve problem-wise and you may have more of an idea of how this will affect you. You should also make sure that if this is some sort of deal you have with your folks [i.e. they will pay the bills while they are alive, then that responsibility passes to you] that you have that written down and preferably in some sort of legally binding way.
posted by jessamyn at 9:24 AM on January 30, 2012 [1 favorite]
Trust me, you want to look into a trust. Besides a financial planner You also need to speak with a medicare financing specialist.
posted by Gungho at 9:32 AM on January 30, 2012 [2 favorites]
posted by Gungho at 9:32 AM on January 30, 2012 [2 favorites]
This is a complicated topic fraught with legal- and tax-related complexities. The first thing you should do is find a qualified attorney in Oklahoma who can advise you on the legal implications. This attorney should also be able to advise you on the financial (tax, etc.) implications of transferring title to the land from your parents to you. If the attorney is unable to do this, he should be able to refer you to a qualified accountant who can help with the financial angle.
Bottom line: this is something for which you really need a professional's advice, if you (and your parents) do not want to make costly mistakes.
posted by dfriedman at 9:54 AM on January 30, 2012
Bottom line: this is something for which you really need a professional's advice, if you (and your parents) do not want to make costly mistakes.
posted by dfriedman at 9:54 AM on January 30, 2012
Best answer: You really need a professional's advice. That said, be aware that one common way of dealing with this sort of thing is by forming a LLC.
This has a number of advantages (but also some consequences) outlined briefly here.
posted by Wretch729 at 10:23 AM on January 30, 2012
This has a number of advantages (but also some consequences) outlined briefly here.
posted by Wretch729 at 10:23 AM on January 30, 2012
I'm guessing your parents may be looking into eligibility for Medicare or some other defined benefit program that uses assets as a qualifier. If so - you want help from an estate planning lawyer, and your parents would probably want to use a trust to hold this property rather than you. IMHO you should talk to your parents about what they are trying to do. Eligibility in some of these programs are a big deal, they don't want to screw this up.
posted by machinecraig at 10:44 AM on January 30, 2012
posted by machinecraig at 10:44 AM on January 30, 2012
Response by poster: Our land is rural. They want to put it in my name to keep their siblings from trying to take any pieces of it when they die. There are houses on it, but they're all paid for, and there are no liens against the land. My parents aren't looking for any eligibility, just to protect me from my aunts and uncles.
I do know that I need to talk to a lawyer, but I'm completely naive about owning property. I know that property taxes exist, but that's about it.
posted by ThisKindNepenthe at 4:01 PM on January 30, 2012
I do know that I need to talk to a lawyer, but I'm completely naive about owning property. I know that property taxes exist, but that's about it.
posted by ThisKindNepenthe at 4:01 PM on January 30, 2012
Best answer: The absolute best thing your parents can do is make sure they have a current, legal will that names you as the person in charge of all the specific stuff in addition to whatever they're going to do in terms of putting you on the deeds. So, making sure you are not just the owner of the property and/or houses, but also that the contents of the houses are properly accounted for, etc. And then for your part, you need to work out arrangements with your parents for who pays for the costs involved in these things while they are still living and after their death. It's possible they could put you on their bank accounts as well which would mean that upon their death the bank accounts just become yours which is, again,much easier than going through the probate process.
So I'd sit down and have an "estate planning" conversation with them which includes not just this but the status of their will and whether they have a health care proxy and durable power of attorney [i.e. if they are still living but incapacitated, who can make decisions for them legally and access their things] and this should set your mind at ease. THEN make sure you talk to a professional [I'd suggest a wills and trusts lawyer but many different kinds of lawyers could help with this] to make sure the plan you have will actually do what your parents want it to do.
posted by jessamyn at 6:55 AM on January 31, 2012
So I'd sit down and have an "estate planning" conversation with them which includes not just this but the status of their will and whether they have a health care proxy and durable power of attorney [i.e. if they are still living but incapacitated, who can make decisions for them legally and access their things] and this should set your mind at ease. THEN make sure you talk to a professional [I'd suggest a wills and trusts lawyer but many different kinds of lawyers could help with this] to make sure the plan you have will actually do what your parents want it to do.
posted by jessamyn at 6:55 AM on January 31, 2012
Best answer: Definitely talk to a lawyer about all this, just wanted to chime in on the property taxes part. I have no idea how property taxes work in Oklahoma, but in my area there are exemptions on property tax rates for lower income seniors, so don't assume that just because your parents pay X per year when they own the land, that you'll necessarily pay the same.
posted by bepe at 3:53 PM on January 31, 2012
posted by bepe at 3:53 PM on January 31, 2012
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posted by Felex at 9:17 AM on January 30, 2012