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Greybird

Mom wants to give house to me

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Hello, I am in Texas. My mother has graciously let me live in a little house she owns and she has decided that she would like to transfer ownership of the house to me. The house is paid for and all taxes are paid in full. There are no leins against the house. My mom lives in a lovely retirement village in another town, she just wants to give me this house.

Is there an easy way to do this without involving an attorney or a title company? I am disabled so transferring the deed to me will not effect any medicaid benefits my mom might be entitled to in the future.

Is there some legal document we can obtain to sign, have witnessed and notorized, file at the court house and get this all wrapped up nice and legal? If so, what is it and where do I get one?

Who am I kidding, nothing is ever that easy, right? Please tell me how to get this done.

Thanks in advance for any help.

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A quit claim deed is likely all you need. These are not difficult to prepare for someone who knows what he or she is doing. If you don't know what you are doing, you could screw this up. If you only find out about any screw up after your mother dies or becomes incompetent, it may be too late to fix it. I suggest you see a real estate attorney to get it done right. It will cost perhaps a few hundred dollars, but that's a worthwhile investment to ensure that after everything is complete you will be the sole owner of the home without any clouds on the title to mess things up for you down the road.

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I think that is probably very sound advice and I will seek legal counsel. I do thank you for your prompt reply.

You have piqued my curiosity so I have to ask you to please give me a couple of examples of what could be done to cause the "screw ups" you mentioned on a quit claim deed and what kind of "clouds" could be on the title that might cause problems in the future?

Nothing is easy these days! (CuSs! sToMp! sPit!) - little tantrum there.

Thanks again! :P

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Is there an easy way to do this without involving an attorney or a title company?

The actual transfer of real property involves nothing more than execution and delivery of a deed (recording the deed, while not necessary to effect the transfer, is, obviously, also a good idea). Deeds are often available at stationery stores and may be available online with a focused google search.

The other issue about which you might be concerned is gift tax, and I would suggest you consult with a tax professional about the implications of what your mother is proposing as it relates to gift tax.

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I think that is probably very sound advice and I will seek legal counsel. I do thank you for your prompt reply.

You have piqued my curiosity so I have to ask you to please give me a couple of examples of what could be done to cause the "screw ups" you mentioned on a quit claim deed and what kind of "clouds" could be on the title that might cause problems in the future?

Nothing is easy these days! (CuSs! sToMp! sPit!) - little tantrum there.

Thanks again! :P

Neither you nor your mother are likely to have any gift tax issues for a small house as the gift tax exclusion (I think) is a million dollars this year.

Where you might have a tax issue is, because it's a gift, if you sell it at some future date the tax "basis" (google it) is her purchase price from when she bought it (plus any capital improvements). If you live in it as your primary residence for at least two years from the date of transfer you can exclude $250,000 from the gain. You can learn more on the IRS website by looking up the Sale of Home publication.

As to the quit claim deed, that's OK, but a warranty deed would be better and you'd be wise to get yourself an owner's title policy as well.

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Neither you nor your mother are likely to have any gift tax issues for a small house as the gift tax exclusion (I think) is a million dollars this year.

No, the federal gift tax exclusion increased to $14,000 for 2013 due to inflation adjustments. The exclusion is the amount of total gifts you may give each person in a year without any gift tax consequences. If you give any person more than $14,000, the amount in excess of $14,000 is a taxable gift. When you make one or more taxable gifts during the year, you must file a federal gift tax return (Form 709). Whether you have any tax to pay on that return depends on whether you have exhausted your federal estate and gift tax unified credit. In 2013, the unified credit (adjusted for inflation) is $5,250,000. So, when you make taxable gifts, the effect is to first reduce the unified credit amount. Once this amount is exhausted, there is federal gift tax to pay. Any of the unified credit left over when you die is available to use by the decedent’s estate to shelter some or all of the estate assets from federal estate tax.

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I'd want to double-check on Texas Medicaid's interpretation of the law and whether that's likely to change if it is as you believe, since some states can decide at any moment (depending how cash strapped they are, I presume) how they want to interpret asset transfers to a disabled child, and whether it's only ok in terms of a penalty exemption if it's transferred to a trust solely for the benefit of a disabled child. That's for your mom to think about, perhaps with assistance of counsel.

I'd also want to know what Texas regs say about the definition of "disabled", and note that if you are receiving assistance based on needs that such an asset might be problematic in terms of your benefits if xferred directly to you vs. to a special trust of whatever variety.

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