What is the best way to protect jointly owned property in the event of one of the owners divorces, has creditors,etc?
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What is the best way to protect jointly owned property in the event of one of the owners divorces, has creditors,etc?
My mother-in-law owns property up north that my husband and his brothers actually paid her for monthly for many years. Now that it has been paid off to her, the boys want to put it in their names. We are not sure how to do this as there are 4 guys that truly own it, but we don’t want it to be in their names if anyone else would be able to take an interest in it in the future. Meaning if someone got divorced we don’t want the spouses to be able to take part of their property or have to sell it to pay them off. So, is there a way for us to incorporate it or something that will keep it safe?
Asked on September 12, 2011 under Real Estate Law, Michigan
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
If there is a concern that real property is in the name of your mother-in-law, but that your husband and brothers actually paid for it over the years with his three (3) other brothers and there is a concern that spouses of the brothers may make a claim to this property if transferred out of the name of your mother-in-law to them, the best way to do the transfer in order to prevent any capital gain tax for a sale is as follows:
1. have the property appraised;
2. have your mother-in-law make fractionalized gifts of the property equal to the maximum amount per IRS regulations to each of her four (4) sons via a gift deed to each of the sons as his separate property retaining a life estate in the property based upon its latest appraisal;
3. make the above gifts on a yearly basis until the mother-in-law's ownership interests in the proeprty is reduced to zero where she retains a life estate in it.
She should consult with a real estate attorney regarding how to implement the above suggestions.
Good luck.
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