Mom wants me to take over her loan, how can this be done?

[Thomas Handy]

A little background on the story. I have been paying my mom's mortgage for the past decade or so. I pay the bank directly. She is retired and called me last night and wanted me to pay off her 15 year loan and take the property in my name. I don't want to come up with that money on the purchase since I'm fine paying the mortgage monthly as is.

Is there a way to legally take over the loan? I thought about calling the bank and see if I could assume the loan since I'm already paying for it.

Any suggestions?
Thx,
Tom

[Bill Gulley]

Thomas, we don't know any of the values here, FMV, loan amount assumed nor if your mom is up in years or just a kid in her 50s (lol) and if there are any serious health issues together with her financial position. All of this can come into play. I would not ask you to spill these private issues in a public forum, but you should spend an hour with an attorney.

I'm assuming that the equity will be under the gift taxes amounts, if not, then your title can be vested over time until the equity is transferred. You'll need to show what you are paying.

There are also rules concerning transfers in contemplation of death as well as in making application for medicaid benefits. There exemptions for her primary home but if that home is sold in contemplation of seeking medical assistance that will put such exemptions at risk. It's usually best to get rid of the property.

One way to stretch out the transfer is to do it at FMV (within reason) and have her finance the sale as a sub-2 and she can gift the annual payment back to you. You don't want to forgive the payment as that would be income to you.

Financing the sale of the equity amount may have beneficial aspects as to any future application for assistance, as in the asset valuation, it would then be the FMV of the obligation she holds, not the property and as we all know, notes are discounted to find a current FMV at the time of application.

So, I suggest you give consideration to the possibilities over the next seven years or so. Anyone can get hit by a bus!