If I am in Bankruptcy, can my aunt put my name on the deed to her house?

Q: In Chapter 13 can I be put on another house’s deed? I declared Chapter 13 about 3 years ago and have been making payments. My aunt wants to put me on her deed. What are the ramifications of that, and the risks to her? She will be entering a nursing home and doesn’t wish to sell the home.

A: Two issues. Is this wise to do for estate planning purposes for your aunt and is this wise for you to do while you are in bankruptcy? From an estate planning point of view, if she titles the house jointly with you, only half of the value of the house will be subject to inheritance tax when she dies. Since the applicable inheritance tax rate for a nephew is 15%, this could save some money. The negative side of such transfer is that if in within five years following the transfer, your aunt needs to apply for Medicaid, such a transfer could make her ineligible for Medicaid funding. The house would have to be included in her assets subject to the Medicaid claim and you may be forced to sell this house unless you could pay the fair market value to Medicaid. This is of course unless some Medicaid exclusion applies for example if you lived in the home as her caretaker for a period of two years prior to the application date. If your aunt really foresees Medicaid funding in her future, you should have her consult with an attorney versed in Medicaid law in order determine if she can shelter some of her estate now perhaps through a Medicaid trust. As far as your bankruptcy, I would check with your bankruptcy attorney as the acquisition of an interest in real estate while under a bankruptcy plan, may, violate your agreement with the trustee assigned to your bankruptcy case.

If you feel like this issue relates to you, or a problem that you are experiencing, please contact me so that we can discuss your situation.