IN Brentwood-Baldwin-Whitehall Summer 2016 | Page 3

INDUSTRY INSIGHT

LEGAL INSIGHT

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Change the Deed to fit the Need

or most people, their mortgage is just a monthly
bill to pay. But few know that the Document
you pay for - the Deed - is the title to your real
property - and can actually be a very useful financial
planning tool under the right circumstances.
“Even though you have a mortgage, you still do
have a deed in your name,” said Attorney Joe Covelli
of Covelli Law Offices. “It’s not like a vehicle title,
where you don’t get the vehicle title until the loan is
paid off. With real estate, you immediately have the
Deed in your name – along with the recording of a
Mortgage Document, which establishes a lien against
your real estate.” The “Note” sets up the personal
liability for repayment, and also establishes the
interest rate computation and terms of repayment.
There are a couple different ways for a
Pennsylvania married couple to hold title to real
estate. One of them is holding ownership in just one
spouse’s name. If the “owner” spouse passes away,
then Probate Court would be required to transfer
ownership. If the home is titled in the names of
both spouses, when one dies the deed would then
automatically transfer solely to the surviving spouse without any court intervention being necessary.
While it’s perfectly acceptable to put the names
of your children on the deed to your home as coowners, it may not always be wise to do so. “You want
to be careful if you are adding the names of your
children onto your deed, because, if they predecease
you, you will be called upon to pay inheritance tax
due to the death of that deceased child,” Covelli said.
“Also, if a child faces a legal claim of a creditor, that
creditor can seek repayment against the real estate
ownership of the child.”
If your child is going through a divorce, and their
name is on the deed, their spouse may also make a

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claim to the property, which is another reason why
deed decisions should always be reviewed by your
attorney, to ensure that your interests are protected
at all times. All children can be added to a deed,
not just one, and each would receive a percentage
claim of ownership of the real estate involved. This
strategy can reduce inheritance tax liability for the
children, when the remaining parent passes away. For
example, if mom passes away, and her two children
are listed on the deed with her, the children would be
liable for only one-third of the inheritance tax burden
of the home - instead of 100 percent !
There are other ways in which a deed can protect
interests and alleviate tax burdens. People can own
property as “tenants in common,” where each has an
equal percentage ownership interest. Alternatively,
the owners could be listed as “joint owners” with the
right of survivorship. Should one joint co-owner pass
away, the other would continue as the sole owner,
just as the married surviving spouse.
There can be a “life estate”, which allows an
individual to live in a home for the remainder of
their natural life. Once that person passes on, the
ownership reverts to the remainder owners listed
on the deed. This alternative is more common for
grown children with elderly parents. In this type of
situation, the children own the real estate, and grant
a life estate to the elderly parent. Inheritance tax does
attach to life estates, so consulting with your attorney
is a must - to be sure that it’s right for you!
For more information on Covelli Law Offices, go to
Covellilaw.com online, or call 412.653.5000. Covelli
Law is located at 357 Regis Avenue (across from the
Pleasant Hills-West Mifflin Post Office).

Joe Covelli has over 35 years’
experience in his local law
practice – and is a 5 Star
Professional Award recipient.
Joe heads a team of attorneys
with expertise in several
areas of the law. For more
information, call 412.653.5000,
or visit the website at
CovelliLaw.com.

FREE Consultation | Call Today! 412-653-5000
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