I recently ran across a case which might hit home to those of you who have helped or want to help your child buy a house.
Son did not have the downpayment or the credit to buy a home, so mom bought a home for him. Their understanding was that it was son’s home. Son made all the mortgage payments and paid the property taxes, and he was paying mom back on his down payment. But the deed was in mom’s name, and they had no written agreement about ownership.
When mom died, the home was still in her name, and she did not have an estate plan. Surprisingly, however, the step-daughter, who did not like son, produced a will. The will appears to have been created under dubious circumstances, and it names step daughter, not son, as beneficiary of mom’s estate. Since the home was still in mom’s name, it may be pulled into her estate.
Of course step daughter is laying claim to the home as well as the rest of mom’s estate. Son knows the home is his, but now he has to prove it. He has to hire an attorney to oppose the probate of the will and to open a civil suit to determine title. This will be very time consuming and very expensive, and the outcome is not certain. Mom was just trying to help son, but she left a huge mess.
At the very least, mom should have signed a deed transferring title of the home to son. Even better, she should have established a living trust stating her intent to leave the home to son, thus avoiding probate and son’s battle with step daughter.