This column first appeared on MySA.com (SA Express-News) on December 1, 2014.
Dear Mr. Premack: My wife and I have been married for 43 years. We bought our home using a Veterans Land Board loan, so it is only in my name. Is it a good idea to keep it in my name or should it be in both our names? Why? Anything we can do to change it? We paid off the loan in full years ago. – CAJ
The Texas Legislature created the Veterans Land Board Veterans Housing Assistance Program (VHAP) to assist Texas veterans purchase a home. This program is, according to the Board, the only one of its kind in the country. It allows Veterans to borrow money at below-market interest rates with a minimum 5% down payment. Private lenders who participate in the program provide loan applications. Once a home is purchased, the veteran is required to occupy the home within 60 days after closing and to continue to reside in the home for at least three years.
When you financed your home through the VHAP, only you (the Veteran) signed the loan and the land deed was placed into your name only. Regardless, the property was acquired during the course of your marriage on credit, and the loan was repaid using money earned during the course of your marriage. Thus, the home would be legally classified as community property even if only your name is one the deed.
Additionally, you and your spouse have lived in the home as your marital homestead. Legally, your spouse has the right to occupy the house even if you were to die and leave your interest in the house to someone else. And because it is your marital homestead, any new loans against the home or any attempt by you to sell the home must be joined by your spouse. Though her name is not on the deed, Texas law protects her interest in the property.
Now, the Veterans loan has been paid and the lien has been released. You ask if there is any reason for the property to sit in your name only. Generally, it is appropriate to work with your attorney to change the title so that you are both listed as owners. A new deed will be prepared in which you, as Grantor, convey title into both of your names jointly. It will be recorded with your county clerk’s office, and then you will inform your local tax appraisal office to put the tax account into both of your names.
Because the home is then jointly owned community property, you will have better tax treatment that you would if it was owned by just one of you. For instance, it will be clear that you are entitled to a full $500,000 exemption from capital gain taxes if and when you sell the house. And when either of you dies, it will be clear that the survivor is entitled to a step-up in the tax basis. Additionally, when you put the home into joint names you can create a right of survivorship, which will help avoid or simplify probate of your estates.
In the future, you may decide to change title again. For instance, if only one spouse needs to go to a nursing home and needs to qualify for Medicaid assistance, then you may want the house title to be in the name of the spouse who is still living at home. This can help maintain Medicaid qualification if the house needs to be sold more than a year after the non-owner spouse qualifies for Medicaid. You should visit with a qualified Elder Law Attorney to review all of the ramifications of these ideas. Your home is one of the most valuable assets you own, and it is important that the ownership records be maintained in a manner that provides the most benefit to both spouses.
Paul Premack is a Certified Elder Law Attorney. His firm, with offices in San Antonio and Seattle, handles estate planning for all ages, probate law and business entity issues. View past legal columns or submit free questions on estate, probate, elder law and LLCs at www.TexasEstateandProbate.com or http://www.premack.com.