We recently received a question from a client: “Can we gift equity in our home to our child/children?” The short answer is that it depends. Typically, you can gift equity in a home that you own when you sell that home to your child. This is called a “gift of equity.” Most lenders will allow a gift of equity as long as the gift is documented correctly, which means that it must be based on an accurate appraisal and clearly stated in the purchase and sale agreement.
What if you are buying a home that is not owned by a family member and your family wants to give you money to assist in purchasing the home? This is referred to as a “gift of funds.” It is easy to confuse a gift of equity with a gift of funds. It is important for the home buyer to talk to their lender and those that are giving that gift should speak with their CPA to make sure they are not unintentionally making a tax or estate planning mistake. A gift is not a loan. A gift is irrevocable. Once delivered and accepted, the person making the gift has no right to ask that the funds be repaid. This will be certified to the lender that the lender will not seek repayment.
If you have any questions about equity, contact Stiles Law by calling (781) 319-1900.
One of the hardest things to do is pick guardians for your young children. A guardian is a person that you trust and empower to take care of your minor children. Parents are left paralyzed in an effort to figure out who could take on the role of raising their children. Often times, when planning for the future, parents leave the guardianship nomination blank and without a nomination the decision will be left up to the probate court. This means that if something were to happen to both parents, the arrangement for the children will be decided without parental voice or opinion. The individuals that seek guardianship over your minor children will then have to go to the probate court to ask the judge to appoint them as guardians. This will be occurring during a time where the children have presumably lost both parents and now, they are going through a court battle where relatives may be fighting over them. Although intentions may be good, the children will be pulled in multiple different directions when it is important that they have a stable atmosphere.
This all stems from not proactively dictating what happens. To avoid this, as a parent, it is important to create a stand-alone guardianship nomination that tells the court exactly who you want to have guardianship of your minor child.
Another option is a temporary guardianship nomination. It is useful if you are on a trip and your children are at home and need medical care. This temporary nomination also covers the 60-day period after your death before the court officially appoints a full time guardian. This helps to avoid pulling the children between all these well-intentioned individuals at a time when they need to grieve.
We have recently launched a website that focuses on estate planning, www.stiles-estates.com, where you can find more information and a contact form, or you can contact us directly to schedule a consultation.
If you have any questions about estate planning, contact Stiles Law by calling (781) 319-1900.
A question came up during our Real Estate class asking, “What is the difference between a nominee and an assignee?” A buyer usually has the right to nominate a nominee to purchase the property. This has no impact on the seller. Common nominees include estate planning revocable trusts, real estate investment trusts, LLCs or corporations. A nominee is ordinarily a related entity to the buyer named in the purchase and sale agreement.
An assignment occurs when the buyer assigns their interest in the purchase and sale agreement to someone else. An assignee is an entirely different person or entity. As a seller, with an assignee, be aware that it may be someone else at the closing. What does that mean? The assignee will “step into the shoes” of the buyer, attend the closing and be bound by the terms of the purchase and sale agreement. The purchase and sale agreement may not permit an assignment without permission of the seller.
Using a nominee can be helpful with estate planning. Buyers who may want to name a nominee should include “or my nominee.” Without this language, a buyer may be forced (depending on the circumstance) to close in your name.
If you have any questions about selling your home or buying a home, contact Stiles Law by calling (781) 319-1900.