Request to Add an "Addition" to My Current Home (Non-Valkyrie Related)

[carolinarider09]

This is along post and I am just looking for ideas..  Thanks.

My wife and I are currently living in our 2,700 sq ft house that we built.  Some items were done by others (sewage, water (internal), HVAC, drywall and wood flooring).  Oh a contractor built the brick piers and the brick curtain wall for the foundation.  The house has a large master bedroom down stairs and two smaller bedrooms upstairs with a single common bathroom upstairs.  Our master bedroom has its own bathroom, tub and shower. 

To ensure that our home, after we have died, was available to one of our children (we have two daughters), our will states that the oldest would have the option, upon our death, to receive the home as part of her inheritance (think that is the correct word).  We just did not want there to be any quibbling about the home.

Last night, since our two daughters have been, for the last two years or so, living together (at our oldest daughters home which she owns) with our youngest daughter working for the same company our oldest daughter is employed by.   Oldest daughter is in a senior position at a company that is in the "Hospitality Industry".  She help build hotels for the owner.  Well oversees the building and staffing.... and annual performance.

Anyway, in a conversion my wife had last night, my oldest daughter told my wife that she and my youngest daughter (since they have been living together for the last two years) had discussed what they might do when the home became available after our deaths.   

Since they have been living together for the last two years, they thought they might like to keep that going when our house was available.  But, they said it would be nice if there was a second bedroom downstairs (since the upstairs bedrooms are smaller) for my youngest daughter. 

I know this is a long story but I had to tell it to get to the reason for the post.  There are lots of people with wide varieties of experience here and I want to try and take advantage of that.

Since the master bedroom is fairly large and the other two bedrooms are not, my oldest asked if we would consider adding a second bedroom downstairs so my youngest daughter would not have to sleep in the smaller upstairs bedroom. 

I am not real thrilled about this but, I don't mind doing some investigation into the addition. The room would have to have its own bathroom (shower and toilet) and storage areas and HVAC system.  Water and sewage could be shared with the main house (depending on location). 

So my wife suggested we add a room to the side of the house where the laundry room is (second picture below).  In reality that is the only place where a connection could be made directly to our present home.

Other thoughts are a "Mother-in-Law" addition (small home like structure self staining).  Issue with that would be if the two wanted to remain "together" that would tend to keep them seperate and it would cost more, I have no doubt.

Other thoughts included a "trailer", mobile home, or something similar. 

I am just looking for suggestions on what might be an option.  I am not sure how much we have to spend, but that is also a consideration.     

Current Home

Front view



Side view (where the laundry room is (that is the door) and where the "carport" was to be built . 

[Sorcerer]

I would say let them figure it out when that time comes. Unless you will be both dead 5 years you shouldn’t put that kind of money into a house. No need for it. If you live long enough your daughter’s living arrangements most likely will change. 2 years is still in the honeymoon phase. Boyfriends, husbands will change how their relationship moves forward.

[Hook#3287]

I agree with Sorcerer, let your daughters figure it out if needed.

There are so many factors that could change that plan, spending time and money for a "possible" situation is not something I would do.

If you decide to pursue it, your first inquiry should be with the Zoning Authority in your town.  You'll need to have your homes district classification and a plot plan if the land is less than the required size.

If it's determined you are allowed to have an additional dwelling, if you go that route, than a separate structure is good.  But there's also water, sewer and foundation to consider, plus the additional land development costs.

Putting a habitual space in the basement requires a second means of egress, as well as in every sleeping room.  If your home doesn't have that now, it would need to be added.

Then there's the "living in the basement" feeling in both psychological and physical aspects.

Psychological is whatever you make it, but the physical can be a challenge.  Moisture is a big concern for basement dwellers.

If I were in your situation trying to decide which way to go, it would be between an addition to the home or a separate dwelling structure.  I feel those would both retain value better than a basement conversion.


my oldest daughter told my wife that she and my youngest daughter (since they have been living together for the last two years) had discussed what they might do when the home became available after our deaths.


Should this discussion give you pause?

[Rams]

I have to agree with Sorcerer.

But, if I really felt the need to increase the size of a bedroom, I'd consider combining the upstairs bedrooms into one larger space.  I assume this is possible.    Yes, that would reduce the number of bedrooms but, it's easily the cheaper route to go.  

If that won't work, then the "girls" would have to figure it out when the time comes.

It's none of my business how you spend your retirement income or time but, adding on to your home won't be cheap.   I also agree that unless you and your lovely wife pass on in the near future, then a lot could change with your daughters and their situation.

Rams

[Oss]

i tell clients to have the executor sell the house and split the money even steven

If one daughter wants to buy the other out she can do that

Only been doing this 42 years so what do I know

[Willow]

i tell clients to have the executor sell the house and split the money even steven
...

This ^^^

[bassman]

i tell clients to have the executor sell the house and split the money even steven

If one daughter wants to buy the other out she can do that

Only been doing this 42 years so what do I know

+1.....MUCH easier in the long run.....

[scooperhsd]

i tell clients to have the executor sell the house and split the money even steven

If one daughter wants to buy the other out she can do that

Only been doing this 42 years so what do I know

Seems like the smart way to do it from my perspective.... IF - they still want to live there after you and the wife have passed on, it's up to them to figure out what to do...

[Jess from VA]

I also agree with letting them work it out themselves (assuming you're happy with the existing will provisions) when the last of you pass, but if you are wanting to do a modification now anyway, I agree with Rams;  Make the two small bedrooms up stairs into one big one (seems least disruptive, and most cost effective).  But would likely diminish the value of the home if/when sold.   

Or, make one bedroom larger but leave some space for a small storage room (if it is needed).

Spending a fortune to mod your home significantly and living through it puts you out of peaceful enjoyment, and you're just spending a chunk of their inheritance for them in advance.   And they may change their minds about living arrangements by the time the last of you pass.  One may get married.  Either or both may need money more than a home when the time comes. 

I would use the will to leave them flexibility of choice, with a 50/50 split however they decide to go.     

[cookiedough]

yah, tend to agree let the kids figure it out AFTER passing, no need to spend several 1000's since IMO the house is plenty big enough to live in as-is.  Who knows, your kids might just want to sell the house not live in it? 

Much like my age 83 mother in law.  She blew 2K on landscape company to remove her front overgrown bushes which in our opinion was nothing wrong wit them to begin with knowing she will  be only living there next 5-10 years tops.  Am sure she will be spending another 2-3K to get new bushes of some sort this year.  NO way 4-5K in landscaping the front yard she (or we) will get back that money when time to sell her house. 

[carolinarider09]

Thanks for all the comments.   I appreciate the information.  

I forget my logic when we decided to include the "purchase" option for our oldest daughter.  I think it was to prevent the "heirs" from having an argument over who could purchase (receive the house as part of the estate) with result the house would be sold outside the family.  

Give the age to which my father lived, I have about 14 years left.   Just trying to do a little "pre-planning".

I will pass on the suggestions to the wife.  

[cookiedough]

Thanks for all the comments.   I appreciate the information.  

I forget my logic when we decided to include the "purchase" option for our oldest daughter.  I think it was to prevent the "heirs" from having an argument over who could purchase (receive the house as part of the estate) with result the house would be sold outside the family.  

Give the age to which my father lived, I have about 14 years left.   Just trying to do a little "pre-planning".

I will pass on the suggestions to the wife.  

judging by the price I got for just a new tub surround and new patio door estimates,  an addition would cost a small fortune in today's pricing.  

I could find better ways to blow 30K or even doubt that, in additions to an already perfect home for the next 15-20 years of my life.  

tub surround estimates 6-12K range and sliding patio door 6.6 to 10K is crazy for sure.

[Jersey mike]

Lots of good responses here. The idea of leaving the home to the girls and they can work it out amongst themselves is probably the best provided one can buy out the other.

If you’re interested in giving the girls a head start, by all means consult with the township on what you can do, then talk to an architect.

[Rams]

Not really responding to the original question but........................

I recently lost my mother, I spent a week plus clearing out her home due to all the items she had kept from her past.   Finding people that would like to have those items was not an easy task but, I did find quite a few.   Addressing the rest of the personal items was another task but, Goodwill got several truckloads.  The city dump got quite a few loads also.   Was not an enjoyable task.

Addressing the funeral and burial issues was also a challenge, funeral homes are there to make money, not to assist in any other way.  

Legal issues, such as Probating the will and taking over other financial issues like house utilities is another PITA.

I bring all these issues up because, upon your demise, your spouse, you or your children will have to handle those things listed and many more along with the emotional loss of a parent.

I strongly advise addressing as many of these issues as possible prior to your demise.

Prepaid and arranged funeral contracts are a blessing.  If you chose to be buried, go ahead and buy that burial plot.   Make one or both of your children co-owners of your financial accounts.   That way upon your demise, there are not inheritance issues, they already own the account.  

Not sure about your state but, consider a Trust on where your assets and money go.

Talk to an attorney about how to make things easier for those you leave behind.   This not only makes things easier but, you get to dictate how you want things done and who gets what.  It also helps if you sit down with your children and tell them how and what you want.

It's also important for both you and your wife to know and understand that just about anything you want may not happen once you're gone and someone else is handling your estate.  Things don't always go the way you wanted them to go.

My mother bought her burial plot long ago because I asked her to.   When the time to use that plot, it was discovered that someone else was already occupying that space in an unmarked grave.   That opened up a whole new can of worms...............

Edited:  Oh yeah, have you considered a Transfer on Death Deed on your home/property?   Again, not sure how it works in your state but, it will make ownership and disposition of the home much easier upon your demise..........

Just a few of the things I ran into.  

Rams

[f6john]

I have now discovered the benefits of having only one child, my son! I will never know the true benefits of having multiple children at this stage of the game but my son has given me 3 grandchildren so now I can witness it and then leave and go back to my home. He’s a CPA and a good money manager, his wife is an only child too and she is relatively happy letting him control their finances. I’m happy for him as he nor his wife have any other family close by and the kids will be even more important to him after we are gone.

I’m hoping that since we have spent untold hours helping our grandchildren he won’t dump us in a warehouse somewhere down the road .

[Rams]

I’m hoping that since we have spent untold hours helping our grandchildren he won’t dump us in a warehouse somewhere down the road .

Hope is a very comforting thing.........................   

Rams   

[Jess from VA]

I recently lost my mother,

Sorry to hear that Ron.  (mine is 94, with all her wits and humor, but slow on a walker)

Much of your post is good advice.  Really, each of us owes a duty to our (lawful or named) survivors to take the time to make our passing as pain free as possible.  And also a duty to set things up in such a way there is no fighting or disputes between and among our heirs (ie a bulletproof estate plan).

Number one of these is to try to set things up to avoid having to file a probate estate in the county probate court if at all possible.  It's tedious, expensive and time consuming, and no favor to your survivors at all.  While you would hope not, it can also have the effect of starting a litigation war among survivors (since the court action is already there to dispose of property, and all they have to do is file claims in and against it).

Bank and investment accounts generally have provision to set up 1st and 2d level named beneficiaries, so that can be set up as part of your estate plan, and none of it is probated (unless you do something stupid like pour it into your probate estate).

On the other hand, adding names to ownership of real property or other assets during your lifetime is fine, IF you have compete (and total) trust that those persons do not decide to exercise ownership while you are still alive.  And it is risky business.  People can get into trouble, end up with civil court judgments against them, have to hire criminal defense or divorce lawyers, and can be essentially forced to say... I need my share of that right now and can't wait for your death.  Since you have made them joint owners, they have a right to their share on demand.  So beware.

I am set up with a prepaid cremation; all you have to do is make a phone call (and tell them where to send the ashes) (I asked them to flush me down the toilet, and they won't do it).

Every bit of my estate avoids probate, except my house.  I will not add a name to ownership giving that person the right to demand their share at will.  I told them if I am slowly dying, I might add them to title then.  Otherwise, they will have to file a probate estate, and there is plenty of cash to cover it and the attorney.  Sorry, business is business. (The cheaply made piece of sh!t cost $17,500 for a small 3 level spit with no garage on a third acre in 1959, I had to pay $152,000 in 1992, and today I am taxed on assessed value of around $480,000)    (today, it is a quite fixed up piece of sh!t)  

I have also created a file which has every bit of information (banks, credit union, account numbers, credit cards, title deed, brokerage investments, car/bike titles, will, and detailed instructions on what to do.  The file is not given over now (too much information), but the person who will need it knows where it is after my body is found (which, given my living circumstances, might take weeks or even months).  But I won't mind at all.     (how will we ever get that smell out of the house???)  

Sorry for drifting your thread Jim, but you seemed to be done with it. 

[carolinarider09]

All very good information... Some of it we have already considered and addressed (death and burial being one).

I will check on the others. 

I do have a repository for information regarding our various "accounts".  But it has not been shared with our daughters as of today.   

I will have to re-read the posts above and take some notes to verify what we accomplished when we had our last will and testament's created several years ago.   I thought we had a good set of rules and the documents were correct but.... I can always review them and verify. 

[Rams]

I recently lost my mother,

Sorry to hear that Ron.  (mine is 94, with all her wits and humor, but slow on a walker)

Much of your post is good advice.  Really, each of us owes a duty to our (lawful or named) survivors to take the time to make our passing as pain free as possible.  And also a duty to set things up in such a way there is no fighting or disputes between and among our heirs (ie a bulletproof estate plan).

Jess,
Thanks for pitching in on this.   I do appreciate your comments.

I did suggest speaking to a lawyer, things vary from state to state but, I'm sure your advice is solid.
The "Transfer on Death Deed" I mentioned is a real emotion and money saver, my mom's home transferred to the "kids" immediately upon the County Register of Deeds receiving the Death Certificate.
That T.O.D. made it a lot easier for the "Kids" to sell the property.   Regardless of what his girls decide to do, if possible in N.C. I would highly recommend it.

I agree that making the kids as co-owners requires a lot of trust but, my dad did this (with me) and his estate was divided up just as his will stated.   But, I'm the one he chose to have as co-owner and that trust meant the world to me.

Pre-Demise arrangements are done to make things easier for those left behind, especially the executor of the estate.   Whether that's funeral and burial or cremation and disposal of ashes.

Having been the Executor of the Estate for both of my parents, I definitely know which way is easier (at least in the state of Kansas).

Thanks again for your words of advice.   All of us should take the steps  to address our own demise.   As little use as I have for lawyers in general, they are the best source for dealing with these things.  Nothing personal implied.  

Rams

[Jess from VA]

Nothing personal implied.

None taken.  I don't trust lawyers as much as the next man.  Not so much essential skills (though that can be a problem too), but running up the work and time and bills to increase the fee.  Which I've had done to me by tradesmen as well.

And most don't do probate at all.  I never did.  Though I drafted 100s of wills (most simple, some more complex), but no trusts.  Most of my clients didn't have enough money or assets to warrant a trust (which goes beyond simple distribution per will, into exercising control over estate after death (maybe long after death).  

Jimmy gets a monthly stipend, unless he............. (then he's cut off for good).

Remember I live in VA, but am not licensed here.  And have done no private practice since 1984.

Look what I found:
Virginia provides its residents with a unique tool to avoid having to probate real property (land or houses etc.) at someone's death.  A revocable transfer on death (TOD) deed allows an individual to name a beneficiary, who will receive the person's real property when the individual dies.

Currently, transfer at death (TOD) deeds (or similar alternatives) are offered in 27 states and the District of Columbia: Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Illinois, Indiana, Kansas, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Texas, Virginia, Washington, West Virginia, Wisconsin, Wyoming.

For a TOD deed to be valid, however, special language must be added to the deed.  But while the owner is alive, the transfer-on-death designation has no impact on the deed.  Generally, TOD deeds for real estate are revocable, so the owner can change the beneficiary or remove the designation altogether at any time. In addition, there is no requirement to notify a beneficiary that the ownership interest in the property will be transferred to them upon death.  

The current owner retains the right to do what they want with the property.  For example, they can mortgage the property, sell it, and/or revoke the beneficiary designation without getting the approval of the beneficiary or even notifying them.  Even if the beneficiary is aware of the TOD designation, they have no legal rights to the property while the current owner is alive.  A TOD designation does not give the beneficiary’s creditors any rights in the property while the current owner is still alive.  

States that allow a transfer on death deed will often provide a free deed template for homeowners to use.  You can check your state or county website to see if they offer a downloadable form.

It appears that most of the problems with these TOD deeds arise in mistakes made in their preparation and creation, and an attorney specializing in them in your state is recommended.  The other problem is if the transferee dies before the homeowner.

[Oss]

There are always 2 potentail problems with those kinds of deeds

1.  Medicaid has a 60 month look back (As do trusts)
2,  The step up in basis may be challenged by IRS (Your CPA should be consulted at this time )
If you pay 100k for a house, and it is worth 400k when you do the life estate deed, but when you die
it is worth 700k, the IRS may say the basis the kid got the house was 100k not 700k so if they sell
quickly there is the 600k capital gain and whatever that tax is then

I used to use deed to kid reserve a life estate for parent in the good old days before trusts became the rage  Both avoid probate.  If the kid is never selling it is still a good cheap alternative and if the kid as I posit always lived there medicaid will not bother her (in NYS) or force a sale, there will be a lien but no sale required of the asset

In many states Medicaid forces a sale of the house when one enters the system but not NYS if you remain in the house and not a nursing home  

In any event, a consult with an elder law attorney in your state is a good investment and  well worth your time and money

[Jess from VA]

This is not my area of expertise.  Nor are taxes. 

So Evan, you're saying that if one used this revocable transfer on death (TOD) deed to a child or children, and shortly after your death they decided to sell and split proceeds right away, they could get blasted with a big tax bill based on the homes appreciation during the parent's lifetime of ownership?

Would it be any different if the child or children had to go through probate to get ownership of the house, and then immediately sold it?

This TOD deed looks like a very good idea if the transferee(s) intend to move in and live there.

The idea is to avoid probate.  But avoiding big taxes is also a good idea. 

[scooperhsd]

Thanks for bringing this up. My situation is something like this. MIL has put a Transfer on death deed to her only child - my wife  (but ONLY my wife).

All is well as long as Gwen outlives Mom - Mom passes - house to daughter, then if Daughter passes, I would inherit her estate. Not so great if daughter passes first - then the house would need to go to probate, where Mom's surviving siblings would inherit - they may transfer to me, but they are under no obligation to do so.

What complicates this is that Mom has Alzheimer's / dementia and is no longer competent enough to make changes. Her durable power of attorney DOES NOT have enough legal description of the house / property to allow us to do anything with it, and again - Mom is not competent enough to make changes.

[carolinarider09]

Lots of stuff I was unaware of thanks.  I remember hearing something about the "medicare" thing.   I see its real.

[Rams]

Lots of stuff I was unaware of thanks.  I remember hearing something about the "medicare" thing.   I see its real.

All I am going to say is, regardless of what one decides they want done after they pass, talking to a lawyer prior to one’s demise is a good thing and will or should make it easier on those left behind.   Don’t ask how I know. 

Rams

[Oss]

Deed retaining a life estate where the kid lived there, still lives there probably always will live there
is still the way to go for THAT FACT PATTERN   but here there are 2 kids.

MEDICAID avoidance, privacy concerns and probate avoidance are #1 reasons for Trusts here in NYS

What if you have a 200k medicaid lien someday, well just think on it?  Do you care that it will be a burden for your kids?

Do not forget if you set up a trust you need to deed the property to the trust or you are pissing in the wind

I am not a cpa and  do not give tax information and what I posted is not legal advice (that is a disclaimer) just a statement of generally accepted principles in my state

Take that for the spirit in which it is intended

Here in NY uncontested probate could be 3500 plus filing fee  If it is a house worth 800k that is nothing to be scared of, the trust and deed combo could cost twice that


One should at least have a simple Will so your kid does not have to get a surety bond in an administration proceeding
Your team is your lawyer and your cpa so get your team together

[Jess from VA]

Your team is your lawyer and your cpa so get your team together

Sound advice.  Esp considering that we Board counsel only practice(d) in one state, and for me long ago.

Up until this thread (and my research), I had never even heard of a revocable transfer on death (TOD) deed to a child or children (to avoid probate).  Which I am pretty sure was nonexistent when I was in school or private practice.  If they intend to live there is one thing, but if they intend to sell in short order, is another thing entirely.

Avoiding a huge tax bill (for your children or heirs) is likely worth a legal fee during your lifetime (to get it exactly right in your state).   

[cookiedough]

someone told me that to have my mother in laws house setup in a revocable trust which I think my mother in law did, to avoid paying about 275k in capital gains taxes.  she bought her house in 1980s for 80K my wife can resell now once she passes  for 350K easily.    Hate to pay 275k in capital gains taxes, since we this year had to pay 4300 just last week for fed taxes.  I guess we just make too much money?  

barely pays to save money anymore since we converted crappy less than 1% CD's to 4-5% CD's in 2023 and we thinking that is the main reason the 1099INT interest we earned by far is a ton more than 2022 is reason federal taxes owed so high.  The more you save, the more FED takes.  Having no dependents anymore or deductions on taxes besides standard deduction mostly sorta sucks.

[Oss]

275 gain is not 275 tax

The rate fed plus state is on the 275 tho

Yes that is why trust better  in her case