Annuity with structured payments or get house paid off?

Question

My mother recently passed away. My dad has recieved her life insurance and has cashed out her savings accounts. He wants to split this money between me and my brother. He said that mom asked him to pay off my house and to pay my brother's way through school. He is going to set up an annuity account for my brother that will only allow him to get a set amount every month for the next 7 years. He wants to pay my house off with my half of the money. This is fine with me and what I would probably do with the money anyway. The catch is that when he pays off the house he wants the deed switched over to include his name. The deed is currently in mine and my husbands name. His reasoning for this is that he doesnt want us to be able to turn around and get the house refinanced. I asked if I would be able to get the annuity that my brother is getting and he said that I could however because the interest is lower on the annuity than on my home loan at the end of seven years I would still owe on the house. I dont know what to do. I don't know what is the safest thing to do and need some advice. We already have about 45,000 built up in equity in the house. And we have no problem making the house payments now. thanks in advance for any advice thank you.

Answer 1

He needs to take a small amount of the money and visit an estate planning attorney to advise him what to do.  Do not just let him put himself on the deed to your house--if he does that and if he passes on, your house could end up in probate court or you could incur a lot of expenses to clear the title.  If he insists on doing that, then you need to see an attorney too before you let him do it.  Also annuities are complex and he needs to make sure that he will not do anything that will subject him to gift tax.  Sorry, but what Dad is proposing should definitely not be a do-it-yourself project.