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  • Writer's pictureChiang Law Firm


Congratulations Natasha Cabucio, JD on your four year anniversary at Chiang Law Firm, PLLC! Natasha started at Chiang Law Firm as a law clerk while she was still at the University of Houston Law Center. She has since graduated and grown into an essential part of Chiang Law Firm, serving clients in Estate Planning and Probate matters as our Senior Paralegal. We are very proud to have her on our team and wish her many more years at Chiang Law Firm!






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Every couple of weeks I get clients who ask if they can add their Mom to the deed to their house, or Mom wants to add her Son/Daughter to the deed of the house. It can be any other person who isn't currently an owner and mortgagee, even including a spouse. I generally tell them the same thing: THIS IS A TERRIBLE IDEA, DON'T DO IT.*


Here's a short list of reasons why:


  1. PROPERTY TAXES: The NUMBER ONE reason why people ask me to add a relative to a deed is so that they can take advantage of property tax exemptions that the person added are eligible to claim. However, it is not that easy. Every time you change the ownership of your house, you are going to have to re-file your property tax exemptions with the County Appraisal District. If you added your mom to the deed of your house thinking you're going to get 100% of her over 65 homestead exemption, you are wrong. At best you will only get 50% if there's only one other owner, less if there are two or more owners. Same for if you are elderly parents trying to deed the house to your child. If you and your spouse are over 65, you get the exemption. If the elderly parents add the son to the house, and worse, he doesn't even live with the parents and he has another homestead in a different county, then the parents will get the over 65 and homestead exemption on 66.66% of the house and the other 33.33% that the son owns will get NO exemptions because he doesn't declare that house as his homestead. As you can see, it becomes extremely complicated very quickly.

  2. THE DUE ON SALE CLAUSE: If your house has a mortgage on it, the transfer might violate the due on sale clause. Most mortgages have a due on sale clause that says if there's a mortgage on the house, the owner can't sell the house without paying back the mortgage first. This makes sense because the bank wants to be able to get their money back if the owner stops paying, and the foreclosure is harder to do if one of the owners is not on the mortgage. The consequence of doing the transfer with this clause in the Deed of Trust is that the bank can accelerate the payment of the note and make it due immediately. This is a real problem if you expected to take the rest of the time to pay off the mortgage. This is in contrast if someone inherits a house after the death of an owner under a Will, Trust, or Transfer on Death Deed or even through the laws of intestacy. The law allows for inherited owners to assume a mortgage. Not so if the transfer was done while living.

  3. FEDERAL TAXES: If you gift someone an interest in the property, it is likey worth more than $17,000, the limit for un-reported gifts to the IRS. You will have to file a gift tax return for the amount of the interest gifted. You won't have to file a gift tax if you don't give anything until you die as part of an inheritance under a Will, Trust, or Transfer on Death Deed.

  4. NO STEP UP IN BASIS: If you gift someone an interest in property, say Mom gifts 50% of her house to her Son, he will not inherit a step up in basis on his half of the house when Mom dies. That means he will probably pay more capital gains taxes if he sells the house after mom dies than if he inherited the 100% interest in the house.

  5. COMMUNITY PROPERTY RIGHTS MAY BE AFFECTED: If a Husband and Wife are transferring a part of their community property house to another person, the act of transferring the property, if done incorrectly, might convert the community property house into to separate property. This will impact how the heirs inherit at death since community property real estate and separate property real estate are passed differently if you die without a will.

  6. THE HOUSE WILL NOT PASS TO THE OTHER OWNERS AT DEATH: The NUMBER TWO reason why people ask me to add someone to a deed is because they mistakenly believe that by adding someone to a deed that person will "automatically" inherit the house at death. Absent any other estate planning a surviving owner CANNOT "automatically" inherit real estate, even between spouses. You must "prove" that the surviving owner inherited the other half of the property using a Will, Trust, or other estate planning like a Transfer on Death Deed. If there isn't a Will, or other kinds of estate planning like a Trust or a Transfer on Death Deed, then the deceased person's share will be inherited by the intestate heirs at law. This can cause problems as the surviving owner will own 50% of the property and the deceased owner's heirs will own the other 50%. That means the surviving owner will need to get consent from all of the other heirs to sell the property. This can get extremely complicated and will require either a probate or a partition suit to resolve, especially if other family members have moved away, passed on, or even become estranged.


*Now, there might be good reasons to add someone to a deed. However in my 15 years of practicing law in Texas, the majority of my calls asking for a deed to add on someone would better served by using legal tools such as Trusts, Wills, LLC's or a Transfer on Death Deed.


Deeds are important legal tools. You should always consult with an attorney to discuss the consequences BEFORE you sign a deed to add someone as an owner. This is why I have a saying in my law firm that whenever a client calls and thinks that they want a deed, it is NEVER "just a deed." There's usually a number of issues that need to be addressed ranging from inheritances all the way to local property taxes and federal income taxes that need to be considered before coming up with the right strategy to reach a client's goals and minimize any downside.


If you or someone you know wants to do a transfer like this, please CONTACT US at 713-568-9206 to set up a consultation so our legal professionals can determine the right strategy for you!


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Updated: Apr 9


When a loved one passes away, what steps to take next can seem like an overwhelming task. Some families call my office the same day that their family member passes, mostly because they're just at a loss of what to do.


First, you must gather information. The more information that you can gather and share with us at the first meeting, the better I can advise you about what kind of court process, if any, might be needed. The following checklist should help you prepare for your meeting with me.


ESTATE PLANNING DOCUMENTS

  • ORIGINAL Death Certificates

  • ORIGINAL Last Will and Testament

  • Revocable Living Trust Documents 

FINANCIAL/ASSET INFORMATION

  • Life Insurance Policies, and Beneficiary Designations 

  • Financial Account Statements, and Beneficiary Designations 

  • Federal and Gift Tax Returns for the last three years

  • Real Estate Deeds, and Beneficiary Designations 

  • Vehicle Titles, and Beneficiary Designations 

  • Business Agreement Documents 

  • Contracts

  • Loans taken out by deceased and loans owing to deceased 

  • Appraisal Valuations for High-Value Belongings (Art, Jewelry, Collectibles)

  • List of unusual assets like cryptocurrencies, bonds, oil and gas/mineral rights, or inheritances

  • Ongoing Bills

  • List of Known Debts

  • List of Medical and Funeral Expenses 

  • Deceased's Medicaid information


OTHER LEGAL DOCUMENTS

  • Pre Nuptial or Post Nuptial Agreements

  • Marriage Certificates

  • Divorce Decrees

  • Adoption Orders

  • Texas DL or ID and SSN for the Deceased (required for probate, and IRS forms, just number is ok)

  • Texas DL or ID and SSN for the Executor (required for probate, and IRS forms, just number is ok)

CONTACT INFORMATION

  • Contact Information for Executors/Trustees, Heirs and Beneficiaries

  • Contact information for family members

  • Contact information for financial planner, CPA, insurance agents

It might be extremely challenging to get this information. This is why I always tell my estate planning clients that assembling all the information for their heirs PRIOR to disability or death is the MOST IMPORTANT part of the estate planning process, especially if that information is locked online behind passwords and 2 factor authentication. It will always be easier for the principal to gather and organize that information than it will be for a spouse or a child, especially when they're trying to do it in a rush, while they are grieving.


In addition, having complete information about beneficiaries and assets is critically important as certain assets do not need a formal probate process to pass to a beneficiary, but other assets, typically financial institution assets without a payable on death beneficiary, must go through the formal probate process to pass to a beneficiary, but it really depends on the beneficiaries and the assets that are provided to the attorney at the consultation.


If you had a loved one who recently passed away and need an attorney to probate the estate, or an attorney to answer your estate planning questions, contact CHIANG LAW FIRM PLLC at 713-568-9206 and schedule a consultation with us today!




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