Deed Versus Will

All five children (myself and my siblings) are in our parents will, but only 3 are on the deed to their home. Would the to remaining two siblings who aren't on the deed be entitled to any money from the estate from the sale of our parents house? It is being sold because are parents have recently passed away.

There might well be a simple answer...No, but alas in the land of the law, just as in Alice in Wonderland, many things are not as they seem.

You should confirm with a real estate lawyer in the state in which the property was located (which may differ from where the will was admitted to probate) what the ownership designation on the deed (title) means. If the children were all co-owners with rights of survivorship with your late parents then in fact the three listed children may now own the house. This is also important to evaluate to understand how the three surviving/inheriting children own the house. If you all three now own it jointly all three of you need to be insured until it is sold and all three may have to sign off on the documents necessary to consummating the sale.

If the will generally divided all assets say equally among the five children then assets governed by the will, i.e., subject to probate, should be divided equally. If the deed listed three of the children as co-owners with rights of survivorship then the house might in fact not be a probate asset and would not be governed by the will, but rather by the deed. So once you've confirmed with a real estate attorney what the title on the deed means you should confirm with an attorney that handles probate in the state where the will was or will be admitted (likely to be where your parents permanently resided, called domicile in tax jargon) that the will and probate process have no impact on the transfer of the house.

The above might turn out quite simply in that everything might be in one state (we don't answer any state specific questions) you may have a local attorney that will help you out with a quick consult on both issues, and perhaps even resolve the more complex stuff discussed below.

Now, let's not forget about Alice. If the will included a provision stating that the house was to be divided equally to the five children, but the deed only listed three, the resolution gets much trickier. Was the deed wrong? Was the will wrong? How can you resolve the inconsistency between the two documents? When were they signed? For example, if the will was signed with the supervision of an attorney while your parents were alive (see more on this below) but the deed was changed to list only three children a few weeks before your parents died and while they were quite ill, the circumstances might suggest some hanky panky. All of this is quite dependent on the facts and circumstances and local law. Also, given the endless possibilities, this too might be a quickie for a local lawyer as part of one simple consultation.

Now, just like those Cable TV late night infomercials...."There's more!"

If the estate is taxable who pays the tax? If the will states that whoever receives assets pays tax pro-rata regardless of whether the asset passes under the will, then the three children receiving the house would bear the tax on the value of the house included in the estate. If the will specifically states that all taxes are paid out of the probate estate you could have a technical legal issue and a big family feud. Unless the will expressly states that the estate bear the tax on non probate property (property like the house which appears to pass outside the estate) state law might provide that the children inheriting the house need to pay their share of the tax.

More yet....

What happened to the house when the first of your parents died? That is important to sort out with a real estate and probate attorney to be sure that the issues you raise above are properly addressed. Depending on how the deed was worded, if say your father passed away first, your mother might have become the sole owner, and this might affect how the property is now distributed.

Don't forget income tax issues. Who owned the house on the first parent's death? Who deducted the taxes and interest on any mortgage? If the house is included in each parent's estate the "tax basis" (the amount used to determine the amount of taxable gain when the house is sold) will be increased to fair market value on the date of death. This might be important to eliminate capital gains as you say the house is now being sold. Even if the value of the house is down 30% from a few years ago, it could be worth substantially more than what your folks paid, so addressing this increase in tax base (called step up in basis in tax jargon) is important too.

Throughout this process be sure the house is properly insured for fire, casualty and liability and that the executors (personal representatives) of the estate are appropriately listed and protected.

While the above sounds complicated, you need to be sure that the ownership (chain of title) for the house is clean and properly addressed as any buyer's attorney (or perhaps title company) will want to make sure the buyer is getting a clean ownership in the house.

Yes the answer might be a simple, "no", but as is so often the case in the tax and legal world complications abound. The complications might all be solved with a quick and inexpensive consultation with the right lawyer (in your state), but not to take that precaution and miss out on any of the potential pot holes above could be a costly mistake.

Get some professional help. Get assurance that the issues above either don't apply to your situation, or if they do find out how to resolve them. Finally, be sure that you discuss with the attorney the estate hires whether there are any other issues to consider. Most importantly of all, try to resolve this without a family war. Since the house is being sold all that is left is money and memories. Don't let the money spoil it.