For estate planning purposes, my spouse’s Aunt transferred ownership of her home to my spouse and spouse’s mother. Technically I guess, they “own” this home, but the Aunt and Uncle still live in the house, have home equity loans on the house and pay the taxes on the house. How would this be considered in determining my child’s eligibility for financial aid? Would this be considered an asset for us?
If you own half of the house, then half of the equity in that house is your asset.
I would check who has those home equity loans. If the aunt and uncle do not own the home, they cannot still have a home equity loan on the property. It’s not theirs.
Whose name is on the title to the house?
Thank you getting me to pull the files and check - the deed for house is actually in just the Aunt and my spouse’s name. My spouse is listed as one of the borrowers on the home equity loan. Sounds like we should get the Aunt to pick another family member to work with at least until the kids are done with college.
Eeep. Did your H realize he was going to be one of the loan borrowers? I’d run from that.
If your husband is one of two names on the deed, he owns half of the house. So half of the equity in that house would be an asset on your financial aid application forms.
When will your first kiddo start college? You want to get this reconciled ASAP. Since there is a home equity loan with your spouse’s name on it, it’s not just a simple transfer of deed. They would have to pay off that home equity loan.
Not a home equity expert, but if your spoils no longer owns that house, I don’t believe HE can take out a home equity loan.
Something isn’t computing here.
Have you talked to your spouse about this “arrangement”? When did this all happen?
The spouse doesn’t necessarily own half the equity in the house. You’d have to know the change of title. I’m guessing the aunt and uncle bought the house with mortgage and the deed was in their name only. At some point they quit claims some of the ownership to the spouse, probably for a guardianship or other way to have him(? ) be able to help with the house on their death. They they needed a second mortgage or HELOC, and since spouse’s name is in the chain of title, he had to sign the loan documents.
You need to figure out if he has a current interest in the house and the value. If he has an interest, it is an asset but it may not be half or even 1/4 of the equity. Tenants in Common don’t have to have equal ownership. If he has something more on the line of ‘payable on death’ it is not a current asset.
twoinanddone - yes, this describes the situation exactly. Thank you for the input. I will have to check out the title, as that would spell out percentages of ownership and details I can’t see in the deed. Yes, I have talked to my wife about it - this happened 7 years ago.