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The Moneyist: My mother willed her home to my two brothers. They said I could live there rent-free, if I pay the taxes and upkeep. Is this a good idea?

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Dear Quentin,

My father predeceased my mother, and she inherited their second home. My mother willed the house and property to my youngest brother and oldest brother. Neither is able to care for the house or property, and they have given me permission to fix it up and live there. 

The deeds are still in my parents’ names, and my brother has a copy of the will stating his ownership. How should they pass the house on to me? I don’t want to pay the back taxes and put in thousands of dollars, and then have no claim to the property. Thank you for your advice.

Daughter/Sister

Dear Daughter/Sister,

Your question contains some worrying assumptions. You are assuming that your brothers will simply quitclaim the property to you and/or convince your mother to will the property to you before she dies. It’s highly unlikely they will do that after the fact. I have reams of Moneyist letters that would attest to that outcome.

If you cannot afford to buy a home today, and it’s cheaper to live in this home now and/or after your mother passes away, then do that. It would help you save for your retirement, and perhaps allow you to build up a nest egg for a down payment on a house of your own. But do not count on your brothers giving the house to you.

The best course of action: Your mother changes her will and/or signs a transfer-on-death deed, which means the house becomes yours after her passing — that is, if your brothers were willing to agree to this too, and there is no indication in your letter that they would support such an action.

A transfer-upon-death deed works in the same way as a beneficiary on a bank account or insurance policy. One of the most important aspects is that it avoids probate — the public accounting of your mother’s assets and liabilities — because the house transfers to you upon her death.

It would have the additional benefit of affording you a “step-up in basis” on capital gains taxes. That is, the profit on any future sale of the house would be calculated as the sale price minus the recent appraised/market price of the home — and not on your parents’ original purchase price.

Obviously, consult a trusts and estates attorney before finalizing any decision, and talk openly about this dilemma with your mother and brothers. But don’t spend money on taxes and renovations in the belief that your brothers and/or mother will deed you the house. That would be a very big mistake. 

In the meantime, I have a question for you: Why is your mother only leaving your brothers this home? Will she leave you other assets instead? This is a question you could certainly ask your mother. Of course, she can do what she likes with her estate, but it would seem fairer if she included all three children in her will.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

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