If you have elderly parents, and siblings . . . .

[abumbyanyothername]

It might not be a bad idea to pull a title report on your parents' home from time to time.

Again today, I hear a story of a sibling who pulled all the equity out of a parent's home leaving other siblings out in the cold.

Avoid the issue upfront by staying informed. I think a title company will pull a report for <$50.

[Lars39]

1. With look-back being 5 years now, instead of 3, it's best to get all that

straightened out well before the parents get in too bad of health anyway.

[virgogal]

6. Are you saying that someone who may live in a million dollar home

that is put into a trust to hide the asset is entitled to Medicaid?

Gee,I thought Medicaid was for those who really needed it.

Silly me.

[Hello_Kitty]

14. There's a whole branch of law to help people do it - Elder Law

I agree with you that it's slimy to hide your assets to get Medicaid. OTOH, we need to reform the system with regards to long term care because it's not in the best interest of society for massive amounts of wealth to be transferred from middle class families to nursing care corporations either.

[LeftyMom]

35. In parts of California a "million dollar home" is an unimpressive suburban tract house.

Not my part of California, mind, but in some places all owning a million dollar home means is that you either paid crazy mortgage payments or bought a long time ago and had the good sense to stay put. My aunt and uncle in Hayward (Hayward isn't the fanciest place ever, it's a middle class suburb of Oakland) have a house that's probably worth a mil and a half (or at least it was a few years ago? Now good luck getting anything to sell if it's not at a fire sale foreclosure price...) and they're totally middle class- a bookkeeper and an auto mechanic. Their kids went to public schools, they drive unfancy, not all that new cars. They live on a cul-de-sac in a subdivision, nothing at all impressive, really. It looks kind of stylin' now, since their furniture so old it's come back into style. They just bought their home decades ago when they first got married and it's worth many times over what they paid, but they never thought about selling. It's not an investment, it's their home. They raised their kids there.

Assuming they had to sell to get help with long term care, where would the other one live? Did they bust their asses for five decades of working life just to lose it all paying for nursing care, or, call me crazy, can they have something to show for all their hard work and not have to worry that a prolonged illness might keep them from leaving their kids their three bedroom, single story "million dollar" house?

Nobody should have to hide assets just to get some undertrained nurse's aid to wipe their ass in some third rate rest home. Medical care is a right, and that includes nursing home care if it's needed.

[Merlot]

2. I've actually been wondering about that..

Very timely post - thanks.

Can you tell me how to find the title company? will any company do it or does it have to be the one that handled the property?

[abumbyanyothername]

3. Just call anyone.

I think almost all title insurers are the same company these days anyway. But look in the Yellow Pages (ha ha -- google title insurance and /your hometown/) and call and ask what they charge for a preliminary title report.

[Merlot]

10. It's an out of state property.

I'll google. Thanks!

[rwheeler31]

4. What are you talking about? We own our home, can the

kids take it away?

[Ms. Toad]

8. Not without your consent

(or a court order declaring you incompetent). I think the OP is talking about sibling rivalry in which some siblings (at least from the point of the OP) take advantage of doddering parents to "steal" (i.e. be given or loaned by the parents) from the family estate.

[InkAddict]

19. Ever hear of identity theft?

Those you would never suspect?

[Ms. Toad]

23. that isn't what the OP was talking about

it specifically mentioned siblings pulling the equity away from other siblings.

[abumbyanyothername]

24. I think he is talking about another situation

Actually not the one I was talking about but worth highlighting.

Caretaker (perhaps a child, perhaps another) steals identity to mortgage property. Makes the payments, but who knows what happens to the rest of the proceeds of the loan?

[csziggy]

26. In Florida there was a run of frauds in which crooks would file change of ownership papers

In county property offices, then take out mortgages on the properties. People who had owned their houses for years and owed nothing on them got served with foreclosure notices for mortgages they had not taken. It got to be big business and hit the news around 2006 or so.

Columbia County Man Pleads Guilty to Mortgage Fraud Scheme
Attorney General Bill McCollum Press Release
May 7, 2009
Media Contact: Sandi Copes [phone]

TALLAHASSEE, FL – Attorney General Bill McCollum today announced that a Columbia County man has pleaded guilty to his involvement in a mortgage fraud scheme. Rory V. Porter faces five years in prison and ten years of probation when he is sentenced next month and will have to pay over half a million dollars in restitution. Porter was prosecuted by the Attorney General’s Office of Statewide Prosecution.

Porter, 42, was arrested in November 2007 by the Alachua County Sheriff’s Office after detectives from the Alachua and Columbia County Sheriffs’ Offices discovered Porter’s involvement in a mortgage fraud scheme with elements of identity theft. The investigation revealed that, between May 2007 and August 2007, Porter befriended owners of homes which were free of any liens, vacant, and for sale. Using information he obtained through his relationship with the homeowners and from public records, Porter forged documents and recorded deeds to transfer the homes to his possession. He would then locate private lenders and borrow money using the homes as collateral. Authorities believe Porter stole homes in the Gainesville and Lake City areas worth in excess of $800,000 and obtained loans against those homes in excess of $500,000.

After obtaining the proceeds from the new home mortgages, Porter would launder the money through different banks and companies that he controlled or did business with, including companies engaged in the sale of adult sex “toys” and the production and sale of adult pornographic videos. In just over two months, he had laundered the proceeds through at least four banks in the Gainesville, Lake City, and Jacksonville areas and closed the accounts.

More: http://www.myfloridalegal.com/newsrel.nsf/mortgage/93B9C1234B2887B1852575AF0050B79D

So sometimes the equity can be taken without consent, though it is illegal as hell.

[Ms. Toad]

28. Again - although it may be an issue to be concerned about

I was responding to a post (apparently) from a parent who was concerned that children could take their property, and trying to clarify the situation alluded to by the OP.

[csziggy]

29. If it can be done by a complete stranger, it can certainly be done by a relative

And there are relatives would would be just as ruthless to their family members or maybe even more.

So actually what I should have said in my previous message, check on any property that is paid off, whether it is owned by an elderly relative or is just vulnerable to a con artist.

[abumbyanyothername]

9. If you become medically disabled, or otherwise

need to give your child a power of attorney to take care of your finances, then they can mortgage your home. Of course, in the cases I have heard of, they don't actually kick the parent out as that would be a little too obvious at the wrong time.

But I have heard, from multiple people, of siblings using the POA to take out a loan against the house and when the parents die and the house is sold, there is no equity, contrary to expectations.

[rwheeler31]

11. This is scary.

[abumbyanyothername]

13. Well, actually

you could probably put in the POA that it is not to be used to mortgage or transfer title to your house.

In fact, maybe I should brush up on estate law and planning and such so that i could actually offer advice on this topic and get paid for it and stuff.

[havocmom]

12. I know some grown people who are trying to get their mom's ranch out from under her control

It IS something that should be watched. Your OP makes a good point. Some 'grown' offspring get tired of waiting for parents to die and decide to use other means to get what they think they have coming before parents are done using it.

[HeresyLives]

15. Who pays back the loan?

I don't see how this is possible.

[abumbyanyothername]

17. Here's how the scam works.

Parents, for whatever reason, and there are many legitimate ones, gives child A a broadly worded power of attorney to conduct the affairs of parents.

Child A is a little stretched for funds, feels like s/he is doing a lot of work that ought to be shared by other siblings, etc. and decides to take an advance against inheritance by mortgaging the house. Child A may or may not be encouraged in this process by free-market behaving mortgage broker.

Children B, C & D think that their parent is living in a fully paid for house, no mortgage.

Child A is not so stupid as to allow parent to be foreclosed, and makes loan payment out of proceeds borrowed. Otherwise, true facts would come to light at an inconvenient time.

When the estate is settled and the house is sold, there is virtually nothing to distribute, as the house now has a mortgage.

Now maybe the mortgage proceeds did go for legitimate parent expenses. But better to know that as it happens, than to find out when the estate is being settled.

[HeresyLives]

20. So the kid borrows and pays back

And if the loan is paid back...the house is free and clear

I see no advantage here

If the house has a mortgage...the child owes it

[abumbyanyothername]

21. The entire loan is not paid back until the house

(supposedly free and clear of mortgage) is sold. The monthly PAYMENTS on the loan are made out of some of the proceeds.

Where did the rest go?

Again, perhaps for expenses that all would agree are legitimate, especially if known and reported while parent is still alive.

Once parent dies, siblings tend to have major fights and splits anyway. Better to know up front what is the status of your parents' property.

IMO.

[abumbyanyothername]

32. Also the loan is taken out in the name of the parents.

Or is nonrecourse (lender looks just to the Real Estate). Or it could even be a reverse mortgage.

The point is, a mortgage is taken out, the house is the source of repayment and some siblings were not notified in advance and found out about it only as the estate was being settled.

[imdjh]

5. The danger of parents who transfer title prior to death, too.

A friend's dad transfered the house into the names of his three children a few years ago, thinking that it was the smart thing to do to avoid them having to pay taxes, and if he became indigent in long term care. Turns out that one of the brothers is an asshole who gambles and ran up huge credit card cash advances in a state where the homestead is not exempt. The other two brothers had to bail out dad (and the other brother in the process) to keep him from having his house taken away.

[marybourg]

31. "Transferring" a house is a making a gift .

If the gift is large enough, gift taxes will be due. This is to compensate the government for not getting the tax later at death. The estate tax exemption is so high currently that no middle class people owe estate taxes at death anyway. "Transferring" a house to adult children is a very poor idea, as illustrated in this anecdote and saves nothing in taxes, although it may serve to qualify the elder for Medicare if it happens long enough in advance of need.

[imdjh]

33. I agree.

But that gift passes under the radar as far as I know.

By the same token, when a gay person adds his partner to his house, he has theoretically "gifted" half the value of the home to his partner, a taxable event, but like with heterosexuals who aren't married, I haven't heard of a case of the IRS trying to collect on that one.

[marybourg]

36. I meant "Medicaid" nt.

[Warpy]

7. That's always a good idea

I talked my dad into a living trust after my mother died but I made sure it was revocable in case I decided to turn to crime all of a sudden.

I know he was checking his monthly portfolio statements very carefully. I don't know if he bothered searching the title on his house.

For the record, I like rice and beans so I never turned to crime.

[ayeshahaqqiqa]

16. Luckily,

my mom gave the house to my brother long ago, with my blessing.

[rwheeler31]

18. Thank you for this post, I would never have thought of

this kind of thing happening.

[ProgressiveProfessor]

22. You can often get the same data from public records and save the $$$

[southernyankeebelle]

25. Well I have one child - We have Wills and he will get everything.

If you end up in a nursery home you must be careful. You will be in a position to sell everything after your elder parent dies and they will get the money. I think you must put the property in their names at least 10 yrs. Make sure you check in your state. My mother-in-law was a little on the wacky side towards the end. She wanted to buy a new car and she did yet she ended up in the hospital a few months later. My husband made sure that he had her transfer the car into his name because he didn't want them to get it when she died. We got that done before hand. The best thing siblings can do is make sure your parents have a will and make sure it states everything in there and make sure you have more than one copy. If your parents are nice have all the children come over and state what they want and the parents can put that in their will. Believe me it will cut out the heart burn. It really doesn't cost that much to do one. One that is done make sure you probate everything. Make sure you hold at least $2,000 aside to make sure everything is paid for in the probate and any unforeseen legal bills.

[abumbyanyothername]

27. I am talking about cases where there was a will

and one of the siblings managed to get a mortgage on a house that everyone thought was paid off in full.

The will left the house to A, B, C and D (more or fewer as appropriate). A was the caretaker, and had power of attorney. When parent died, B, C & D were surprised to find out that house had been mortgaged.

Because of the cost of litigation, it is almost never worth it for B, C & D to sue A for an accounting and hard, hard feelings that last a long time generally result.

[rwheeler31]

30. I like plants but if i wind up in a nursery home

I am in much bigger trouble than I thought.

[NNN0LHI]

34. I think a Trust is a lot better than a Will

Avoids having to go through probate ... and making lawyers rich.

Don