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David Kennett
David Kennett, Attorney
Category: Estate Law
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Experience:  25 years practicing attorney
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Massachusetts rental property Not sure if this is an "estate

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Massachusetts rental property

Not sure if this is an "estate law" or "real estate law" question:

I have a mortgage on a rental property (formerly my residence) which I purchased prior to getting married. I am considering adding my wife as a co-owner to ensure a smooth transition in the event of my death. There are 10 years left on the mortgage.

We are "tenants by the entirety" on our residence. Our other assets, accounts, etc, are primarily held separateley. We file our taxes jointly.

Are there any reasons not to add my wife as co-owner of the rental property (e.g. taxes, liability in the event of a tenant lawsuit, etc.)?

All parties/property are in Massachusetts.

Dear askHA12 - It is difficult to predict the future or what possible occurrences may arise. Certainly adding your wife's name with right of survivorship makes it very easy when one of you passes away to transfer the property to the other. That is probably the biggest advantage. I'm not an accountant but I know of no special tax advantage or disadvantage there would be but for that you would have to consult with your tax preparer. The biggest disadvantage would be if you ever got divorced you would lose your right to keep the property as previously owned property. Once the property is commingled it becomes marital property. One other thing you should do if you decide to add her name is XXXXX XXXXX permission from the mortgage company. Generally there is no problem adding or removing a spouse from a deed but technically the mortgage has what is known as a "due on sale clause" meaning any transfer of the deed gives the lender the right to accelerate the mortgage so I always tell everyone to make certain they do not inadvertently violate the due on sale clause and get into a problem with the lender. There can be other issues if you have or do not have a will. If you die without a will then your estate would pass according to the law of intestate succession and your spouse would not automatically inherit the assets, especially if there are children. If you have a will and leave everything to your wife then it would go to her but have to go through probate whereas if the deed is joint with right to survivorship it would pass directly with no need for probate. It's difficult to cover every possibility when the question is asked in a general sense. If there is some specific concern about a possible future event that I have not covered please let me know.
Customer: replied 3 years ago.

Hello David


Thanks for the prompt response.


What about a tenant lawsuit. Do we have any more or less exposure by adding my wife?



There would be more exposure in the fact that your wife could be named in suit. The best protection in that area is to have sufficient insurance since a suit against you would still have a negative effect on your overall financial situation. I always recommend getting an "umbrella" policy. They are relatively inexpensive and cover whatever the property liability doesn't.
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