Q: Grandparents put their house into a living trust & want me to have it. How to go about this?
What is the best way to put the house in my name? Are there any options where it can be gifted to me so I don't have to take out a loan? Would buying it be best (and would a first-time homeowner's credit apply?) Are there any other options? I plan actually to live in the home and not resell it, and there is a mortgage (it wouldn't be a problem to cover). There is also a Will; I am the #3 executor, and the first 2 are on board with the house going to me as well.
A: Your grandparents can deed the property to you, but this is problematic because there is a mortgage on the property. The mortgage likely contains an acceleration clause that states upon transfer of the property to a third party, the mortgage will be immediately due and payable on full. Further, if the property is worth more than the annual gift tax exemption, your grandparents would have to file a gift tax return. It would be best for your grandparents to speak with a lawyer to discuss the implications of transferring the property and how to avoid mortgage acceleration and incurring taxes (including transfer taxes and municipal fees).
Peter J. Weinman agrees with this answer
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