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Can Creditors Put Lien on Mother's House For a Child's Debts Who is Listed on the Deed?

Attorney Thomas B. Burton answers a reader's question about whether creditors can place a lien on the mother's home for the debts of a child who was added to the deed of the home by the mother, and who is listed as a co-owner of the home.

Transcript of Video: Can Creditors Put Lien on Mother's House For a Child's Debts Who is Listed on the Deed?

Today's question has to do with creditor

claims and real estate the reader asked

can creditors put a lien on our mother's

house from one of our siblings whose

name is on the deed and owes creditors

but has passed one of our siblings who

was listed on the deed of our mother's

house has passed a owes substantial amount

of medical and other debt could they put

a lien on her portion of the house even

though she is deceased so it sounds like

the mother put her children on the name

of her deed of her current home but the

mother's still alive now this is

unfortunately a very common estate

planning technique where the parents try

to avoid probate on their death by

adding the children to the deed while they

are alive the reason I often warn against

this is exactly what's going on here if

you put your children on the name of the

deed now they become current co-owners

of the property that means if they have

creditor issues and the creditor goes

looking for an asset to put a lien

against it's very easy to research the

real estate records and see that your

son or daughter's name is on the deed to

your house now oftentimes you work your

whole life to buy a house to pay it off

and have it solely in your name so when

you put your child on there and they

unfortunately sometimes through no fault

of their own like in this case have

medical bills that asset can become

subject to claims of creditors for this

reason I recommend you leave your home

at death to your children through your

Will or the best is to avoid probate by

leaving it through a trust then it

transfers at death and they also get the step

up or new basis upon your death so that

if they sell the home they take the

asset at the basis it's valued at your

death versus the basis you bought it at

and what I mean by basis is the tax

basis often if you owned your home a

long time you bought it many years ago

for a much lower price when your

children go to sell it they would owe

capital gains on the difference between

what you

paid and the place they sell it for if

you add them during your lifetime if you

leave it to them at death the tax law

grants them what we call new basis at

death and they can often sell it at that

new basis and owe little or no capital

gains at the 15% tax rate so I'm sorry

to hear about the situation but because

your deceased sibling is on the deed

it's possible the creditor could go

after that asset now if your sibling

passed away and there's been no probate

opened you'll have to see what's going

on there with creditor claims generally

for the deceased sibling there's a

period of time for creditors to present

claims so you may or may not want to

open a probate for that sibling

in order to get that timeline running I

recommend you speak with an experienced

probate attorney in your area before you

proceed because there's a lot of issues

here and doing it one way versus the

other could end up costing you and your

mother and your house a lot of money so

good question and thank you for asking!

© 2019 Law Office of Thomas B. Burton. All Rights Reserved.

Transcript and captions provided for ease of access for the hearing impaired.

For questions about this topic, or to suggest a topic for a future blog post, please contact my office.

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