DEAR BENNY: My wife and I are rather perplexed with the legal advice we have received with respect to our estate planning. We own a house (fully paid for) as "tenants by the entirety"; all personal effects and household goods are owned in common; we have joint ownership of bank accounts, savings, etc.; my wife has life insurance (I’m the first beneficiary and our son is the secondary beneficiary), and we own one automobile, which is paid in full. The total value of everything we own is well below the current exemption threshold set by federal laws.

Based on the above, my wife and I have come to the conclusion that separately executed wills would help ensure that our son will get everything outside of probate. We also believe that creating a trust would only frustrate this goal and is unnecessary given our particular circumstances. –G.M.

DEAR G.M.: Owning and titling all of your assets jointly with your wife should avoid probate after the first of you dies, but probate would be required when the survivor dies. The survivor could put all of the assets into joint ownership with your son, but I generally do not believe this is a good solution.

While you trust your son now, should he get married, one never knows what his wife will want and she could frustrate your objectives. Also, a judgment entered by a judge against your son by a creditor could result in a lien against the property.

You could also put different properties into different trusts, with your son named as beneficiary of both trusts. This should avoid probate so long as absolutely every asset is, in fact, listed on the trust documents.

I would recommend that each of you have a separate last will and testament while you are both alive and mentally competent. This will be helpful should the survivor’s assets have to be probated.

There are no tax advantages when one creates a living trust. However, there are other benefits, such as privacy and allowing a successor trustee to step in upon disability, and — perhaps more important if you have property in different states — it will avoid having to arrange for separate probates in each state (called "foreign" or "ancillary" probate).

Talk with your estate attorney. In many states, the probate process is no longer as time-consuming or expensive as it used to be. Many states have adopted the Uniform Probate Code (or variations of that law), which greatly simplifies the process.

DEAR BENNY: I was out of work for one year. Now I have found a good job 60 miles away and will move to be closer to my job. I purchased my home two years ago for $301,000, plus cabinet upgrades and other improvements of $4,000. If I sell it for maybe $305,000 and pay the real estate commission of 5.5 percent, I will have a loss of more than $16,000. What, if any, tax break will I receive? –F.Y.

DEAR F.Y.: Unfortunately, you cannot take a tax loss on the sale of your principal residence. Such losses are available only if your property is investment in nature — i.e., you rent it out.

If you can sell your house now in today’s uncertain market, I would take the money and run. Perhaps you can convince your real estate agent to take a lower percentage commission instead of the 5.5 percent.

You can, of course, rent out the house for a year and file the appropriate tax returns to prove that the house is now a rental. However, you will have to consult with your own tax adviser on the pros and cons of going this route. And you will be a landlord, with all its associated problems and laws.

DEAR BENNY: My mother-in-law passed away in April 2000. Her home, which is paid for, was placed in a trust fund. The trust states that the youngest son is to live in the home until he moves or is deceased, then the house is to be sold and divided among the five grandchildren. There are three children, one older son, and one daughter also.

The trust states that the youngest son is to pay all property taxes, homeowners insurance and all maintenance of the property. No money was designated to support this trust fund, and the son pays no rent. He has defaulted in paying the property taxes, which the daughter, who is the first executor, has had to pay three times in the past 10 years.

When the time comes for the house to be sold and the proceeds divided among the five grandchildren, what inheritance taxes will they be responsible to pay?

Also, the house has not been maintained, according to the provisions of the trust fund. Can the son who lives in the house be told to maintain the property or the house will be sold? And if he cannot purchase it can he be forced to move out? –J.C.

DEAR J.C.: These are questions that can be answered only by reviewing your own state law. However, I have to assume that any required inheritance tax was paid when the mother-in-law passed away. When the youngest son dies, there should be no inheritance tax because he is not transferring any interest. Likewise, if he moves out and you sell the property, no inheritance tax would be due.

If the youngest son (the life tenant) fails to keep up the property, depending on state law, the remainder beneficiaries (i.e., the five grandchildren) can generally pay the costs of upkeep and sue him for amounts expended, or in certain cases, ask the court to sell the property, in which case he would probably receive the value of his life interest (based on actuarial tables taking into account his life expectancy), less the costs the remainder beneficiaries were required to pay to maintain the property.

The value of a life estate can be surprisingly large in comparison to the remainder interest. You all need to consult a lawyer in your state and review the appropriate valuation tables used by that state. Hopefully, you will be able to settle this matter without going to court.

DEAR BENNY: I read that the Obama administration created a new program to help homeowners who have lost their jobs pay for their mortgages. I lost my home to foreclosure and am now renting, but I recently lost my job and I am in danger of being evicted. Is there a similar program that could help my family stay in the house we are renting? We can’t afford to move! –Theresa

DEAR THERESA: It wasn’t the Obama administration only that may provide you some relief, even though it may only be temporary. On May 20, 2009, President Obama signed into law the Protecting Tenants at Foreclosure Act of 2009, which was enacted by the U.S. Congress.

If your home was foreclosed upon, unless a bona-fide purchaser at the foreclosure sale wants to personally move into the house, you can remain in the house at least until your current lease expires. If you are on a month-to-month lease arrangement (in other words, your existing lease expired and you did not sign up for another lease term), you can stay for at least 90 days.

If, on the other hand, the buyer of your house does want to move in, while you still have to be provided a 90-day notice, this notice can take place even if your existing lease would run for more than those many days.

This is a sharp deviation from the normal landlord-tenant laws. Normally, if a buyer wants to move into a house that has tenants, the buyer must wait until the lease term ends.

You should also review your own state laws. Some jurisdictions, such as Washington, D.C., where I practice law, have very strong laws protecting tenants, and those laws may take priority over the 2009 federal law.

In many large cities, there are nonprofit organizations that may also be able to assist you. Your local elected representatives should be able to provide you with the names of some of these organizations.

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