Include spouse's name on the deed to your house


October 23, 2005

I live in Bel Air, am married and own a townhouse deeded in my name, and with a mortgage in my name. I also have a will leaving everything to my wife.

If I die, would ownership transfer automatically to my wife? If so, would she have to pay an inheritance tax? Would she have to report my death to the mortgage holder? Does it matter? Or could she just continue to make the payments? Would she have to get her name on the deed to sell it? Right now I assume I just can't add her name to the deed without notifying the mortgage holder and reapplying jointly for a new mortgage. Is that correct?

I recommend you execute and record a new deed, adding your wife's name, so that you and she own the townhouse as tenants by the entireties. When the first of you dies, the survivor will own the property automatically without the need for probate. There is no state transfer tax to add a spouse to a deed and no inheritance tax is paid when the first spouse dies. The surviving spouse can sell the property without creating a new deed.

Many borrowers would not notify their mortgage company when they add a spouse to the property deed, and it is unlikely that a mortgage holder would require, or even request, that you reapply jointly for a new mortgage. However, if you should die first, the mortgage holder may either insist that the mortgage be paid or require that your wife assume and become liable for the mortgage debt. If you die owning the townhouse in your name alone, the property will become part of your probate estate. When your estate is distributed, your personal representative, named in your will, will record a deed conveying the town home to your wife, if she has survived you, as the named beneficiary. If you want your estate to pay off the mortgage, so that your wife takes the property free and clear, you should specify this in your will. Otherwise, your wife will take title to the townhouse subject to the mortgage and may have to refinance the property or use other funds to pay off the debt.

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