Q: Our house loan is in my mother in laws name. But the deed on the house is in my husband and I's names. She quit claim to
Us several years ago. She has now changed to mortgage to an irrevocable trust with the beneficiary being my husband exwife and kids. The deed is still in our names. What happens when she dies?
A: If the house truly is in your name along with your husband, your mother-in-law's death will be of no consequence. The house will remain in your names when she passes. The unfortunate problem with that technique (lifetime gifting), however, is loss of the step up in basis at your mother-in-law's death, which could mean a large capital gains tax bill for you when/if you go to sell the house. This is a classic do-it-yourself estate planning mistake.
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