A title search is a useful tool in elder care planning

“My Mother wants to transfer the house to us.” Preserving family assets through transfers of ownership is part of the big picture of elder care legal planning. We look at who owns what, how it’s owned, whether there are any restrictions or liens, and how to cover the costs of care after assets are transferred. From time to time a client has a different ownership interest in the property than what they think they have, and they may not even have a copy of the latest Deed. When a person is buying a house on the market, running a title search is a standard part of the process. When acquiring a house from a parent, people seem to think of it all in a different way. “Can’t you just do a quitclaim deed?”

The parent, as transferor, needs to know what they own so they can know what they are transferring. Also, if they might apply for Medicaid within 5 years, they need to know the potential “Medicaid transfer penalties” that could result from this transfer. It seems obvious, but there may be old mechanics’ liens on the property or liens left over from a program that supplied home renovations to the senior. There may be a reverse mortgage on the property that will have to be refinanced and paid off it title is transferred. The parent may own less than the full interest – perhaps they have just a half interest because the property was retitled as tenants in common with their spouse for estate planning purposes. They may only own the life estate, thinking they still own the entire property interest. There may be an adjacent lot whose title has merged with the title for the home property.

I had one case years ago in which the elderly client lived in the house and truly believed that she owned it 100%. As it turned out, she was one of a number of siblings who had inherited the property from their deceased grandparents, no estates were ever administered and no one had a Will, and the prior generation (her mother and her aunts & uncles) had an array of children as well; it turned out she only actually owned about 15% of the whole. Or as I encountered in a recent case, they may not yet own the property at all — it was just part of the general residue of the estate under the Will of a deceased relative, but the tax waiver was never obtained by the Executor, it’s unknown whether all of  the estate’s obligations were paid, and the property was never transferred to the residuary beneficiary by the Executor.

The family member(s) who are receiving this gifted property also need to know just what they are acquiring, as they now will have an asset on their own balance sheets that needs to be reported under various circumstances such as an application for a loan or for financial aid. The legal rights of the recipient vary based on just what property interest they have acquired.

There are also times that changes have been made to the property by the owner or an adjacent owner, such that an updated survey might be a good idea. Many deeds have been uploaded by the County clerks and can be accessed online – here. A comprehensive title and judgment search can be ordered through a title company and will reveal whether there are other owners or encumbrances that would be an impediment to a transfer or which would create a headache for the transferee.

A real property transfer typically involves a very substantial transfer of assets. Doing the extra steps to confirm the status of the title will go a long way to preventing future problems.

Call us for advice on preserving the family home, and elder care asset preservation planning ….. 732-382-6070

“Can you just do a quit claim deed?”

“Can you just do a quitclaim deed?” is a common question brought to our office. Sometimes it’s a question by a child, other times by the spouse of the senior citizen homeowner. There’s a concern about “saving the house” when nursing home care is looming on the horizon. Leaving aside the complex question of whether such a transfer will disqualify the senior from receiving Medicaid benefits to pay for their nursing home care, there is still the question of who has the authority to sign the Deed. The fact that it’s a “quitclaim” type deed — as opposed to a Deed that is prepared after a thorough title search with a guarantee that the title is clear — doesn’t change the underlying fundamental of who can sign the Deed.

Of course, the Deed has to be signed by the owner of the property. If that person has advanced dementia and no longer has capacity to understand the nature and purpose of signing a Deed — even if s/he can pick up the pen and sign his or her name — such a deed might be void or voidable on the grounds of incapacity. Cases dealing with that situation go way back and New Jersey and other states have had these cases for at least a hundred years.

Is there someone who has legal authority to sign a Deed making a gift of the property? Many powers of attorney (POA’s) are limited. Some are limited to banking transactions. I had a case in which the POA did not include any real estate powers. Some POAs have broad powers but do not authorize the agent to make gifts or transfer assets. In still other cases, there is no power of attorney at all. Again, the person with dementia would need to understand the nature and purpose and effect of signing a (new) power of attorney; they have to be able to interact with the attorney who is trying to prepare legal documents for him or her.

A guardianship may be required, which is a process that can take several months even if  no one is contesting it. The Courts in New Jersey do have the power to authorize a Guardian to sign a Deed to transfer ownership of the ward’s property, provided that the  five-part “test” of the case of In re Keri is satisfied so that the best interests of the ward are protected.

So yes, we can write a “quit claim deed.” The question is — can it be signed? if so, by whom? And is it smart to do so?

Call for advice before embarking on senior care asset protection planning … 732-382-6070