Please take legal steps to protect those you love.

[citybutch]

I posted in your old thread Keri... and I love that you are keeping this information alive for our community. It is so important. My heart bleeds for both you and your friend. These times are devastating even when there is appropriate planning. The lack of planning brings a whole other level of devastation that most people do not think about much less plan for. It is hard to think about when times are good... but it is in the good times we need to take the appropriate steps.

A couple notes of caution:

For those of us who DO own homes and want to put our beloveds on title, please be aware that this IRS considers this a gift and anything over $13,000 is taxable to the person who is gifting the property. Unless there is some kind of "consideration" (payment/purhcase/etc) then you may be opening yourself up to a serious tax consequnce for this type of transfer. Some tax advisors may give contradictory advice... but it is very clear in IRS code. Please be careful... wills and trusts can accomplish the same goal without the gifting tax consequences. ALSO, when you transfer title as a Joint Tenant to your beloved you both become subject to the creditors and liabilities of the Joint Tenant... something you may regret later on...

Also be aware that Joint Tenants is not always the best and cheapest way to hold title to any asset (home, bank account, etc). There may be tax and probate consequences to the asset at death, depending on what state you live in. Discussing your wishes with an Estate and Tax attorney who is very well versed in LGBT law is highly advised. Also make sure your financial planner is well versed on these subjects. It saves you on many headaches down the road.

There are many couples in our community who are in bi-national relationships ( I count myself as one of those). Whether you are in a same-sex, heterosexual, or otherwise defined relationship, if you are living in the US, you are exposed greatly to transfer taxes at death. You are exposed to Estate taxes after transferring a mere $133,000. If you own a home and a life insurance policy (heck, if you own just ONE of those) you are exposed to a very high transfer tax at death. Your financial planner and attorney should be well versed on these types of situations. There are trusts that exist to maximize the transfer of these assets at death.


September is Life Insurance Awareness Month. This month is a perfect time to make sure you have enough life insurance, update beneficiaries, and review your entire insurance portfolios to make sure what you want is what is going to happen should one of you pass away prematurely.

Anyhoo... there are so many other issues to consider as LGBT couples... but even heterosexual couples need to do their planning. If you die intestate (without a will or trust), the state you live in has a plan for you... and I can guarantee it is NOT what you want to have happen...

[citybutch]

I was repped this morning on this thread and thought I would give it a little *bump*....

Always important info!

[citybutch]

I also want to add that the "consideration" needs to be at fair market value. In other words, you cannot transfer title to your partner and receive $1 for the transfer. If fair market value is above what is paid then anything above what is paid will be considered a gift.

Originally Posted by citybutch

For those of us who DO own homes and want to put our beloveds on title, please be aware that the IRS considers this a gift and anything over $13,000 is taxable to the person who is gifting the property. Unless there is some kind of "consideration" (payment/purhcase/etc) then you may be opening yourself up to a serious tax consequnce for this type of transfer. Some tax advisors may give contradictory advice... but it is very clear in IRS code. Please be careful... wills and trusts can accomplish the same goal without the gifting tax consequences. ALSO, when you transfer title as a Joint Tenant to your beloved you both become subject to the creditors and liabilities of the Joint Tenant... something you may regret later on...

[Luckydwg07]

Bump.... good stuff

[iamkeri1]

Hey, citybutch,
Regarding the "consideration", I have some questions.
Is the consideration amount based on equity in the home or the purchase price or the actual market value? If you bought the home five years ago for one hundred thousand, (and the value has now dropped to $60,000 or risen to $150,000) but only have $3000.00 in equity, can your partner pay you $1500.00 to satisfy the consideration or must they pay ome other amount?

Can the consideration be a kind of "trade"? Like I bring my $1500.00 furniture set to your house and you put my name on the title? Or I put your name on the title of my home with a conparable equity anount in it at the same time so there is an equal trade of value?

Thanks for keeping this thread current.
Smooches,
Keri

[citybutch]

Interestingly, the gift depends on if you are both on the loan or not. If you quick claim your lover over onto the deed but assume the entire loan then courts have looked at this as gifting the entire amount of the fair market value of the house. If you both assume the debt against the property then you are gifting 50%.

So your second question is embedded in the answer above... it is the fair market value of what you owe that you have gifted. If you gifted it in 2008 it would be the market value on that date.. not on the date in 2011 when you sold it and value fell... and the court AND the IRS will calculate these values. You would both assume the loss.

The answer to the second part of your post is really going to depend on what state you are in and whether it is a Common Law state or Community Property state... and when the furniture was purchased. One really doesn't "title" furniture so it is comparing apples and oranges.. but if you are in a state like California and one person buys the furniture during the course of a Domestic Partnership/Marriage and the other buys the house.... and then gifts it... then it could theoretically be argued in court that there was a certain level of consideration (one would have to come up with a lot of furniture to make that happen it would seem to me). The key is... is that any amount of the value of the house that is above and beyond the value of the furniture is a gift.

Consideration does not have to be cash. If for example, your lover supported you and paid all your bills out of her account and it became a documented loan, then you gifted her a quick claim onto your deed to repay her and it was a comparable amount of equity... then that would be clear consideration.... and easily argued.

Finally, it really shouldn't freak people out that you are gifting. Currently you can gift up to $5,000,000 to anyone... in your lifetime. That's a lot... (it will probably go back down closer to $1,000,000 in 2013). However, anything above the $13,000 annual gift exclusion needs to be reported to the IRS in a Gift Tax Return. It will ultimately impact your estate transfer at death... but there are many in our community who will not reach the $5,000,000 that we are allowed to transfer at death (with proper estate and trust planning). What I don't want to see is for the estate tax exclusion to go back down to $1,000,000. MANY of us would be impacted with this tax because we are not recognized federally in our marriages (heterosexually married couples can transfer an unlimited amount of assets at death with proper planning). If you own a home and a life insurance policy then odds are you would have an estate tax problem if it went back down.... When I work with my clients I really look at ownership and titling of assets (including life insurance) to make sure that no matter what happens the best tax consequence is realized.

Originally Posted by iamkeri1

Hey, citybutch,
Regarding the "consideration", I have some questions.
Is the consideration amount based on equity in the home or the purchase price or the actual market value? If you bought the home five years ago for one hundred thousand, (and the value has now dropped to $60,000 or risen to $150,000) but only have $3000.00 in equity, can your partner pay you $1500.00 to satisfy the consideration or must they pay ome other amount?

Can the consideration be a kind of "trade"? Like I bring my $1500.00 furniture set to your house and you put my name on the title? Or I put your name on the title of my home with a conparable equity anount in it at the same time so there is an equal trade of value?

Thanks for keeping this thread current.
Smooches,
Keri