What to do now that my brother has passed away if we transferred property into his name for title purposes only?

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What to do now that my brother has passed away if we transferred property into his name for title purposes only?

My ex-wife and daughter signed over a house that was in their name to my brother for $1.00 in order to keep my daughter’s soon-to-be ex-husband from taking the house from her. We then sold the house to another party with a contract drawn up by an attorney to be paid to my ex-wife and daughter. We do have a paper trail of all receipts that were spent on fixing the home up before selling the house. In the process of all this taking place, my brother passed away and now his daughter thinks that she owns the house in question and we want to know if we have a leg to stand on in this matter? The only real thing we have from my brother is signed on an envelope stating that he has no interest in this home as well as the actual attorney knowing the reason behind this matter.

Asked on March 31, 2011 under Estate Planning, Illinois

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You have huge potential problems here.

First and foremost, there really is no such thing as "title in name only"--title is title; whomever holds title owns the property. So on the face of it, your brother owned the house, so when he passed away, the house would pass to heir(s) by either will or (if no will) intestate succession. So at the outset, his daughter has good reason to think she owns the home, if she's the one who would inherit it.

Sometimes it is possible to establish that based on the parties' confirmined intentions, their actions, what payments each made, that a party does have an "equitable interest" in property (e.g. an interest in, despite the legal ownership), but this is very difficult to do and probably requires more than showing you paid for repairs--that, for example, might let you establish that you should get some portion of the proceeds from the house when sold, but most likely would not establish ownership. Also, a party seeking equitable interests must have "clean hands," whereas in this case, by your admission, what you were trying to do was to deceive another person and prevent him from getting his share, in a divorce, of the property.

Second, what you did may constitute a form of fraud; that is, to the degree that you *could* establish that your ex-wife and daughter "really" owned the home, then by putting it in your brother's name, you hid assets from the daughter's soon-to-be-ex-husband. If you could somehow show that the home is really the daughter's and ex-wife's, the daughter's soon-to-be-ex-husband could go after it--and also seek attorney's fees for the extra legal work.

Third, ownership of a home has significant tax consequences; have all taxes been paid properly, by the appropriate person(s)? If not, there may be tax liability, which can lead to interest and penalties.

This is a situation where you should seek legal counsel immediately to resolve these issues.


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