{ "media_type": "text", "post_content": "Estate tax question. Elderly mother is on her way out, should we put me and my sisters name on the house deed? Does this make sense from an estate tax perspective? ", "post_id": "5ab966a8a1bab50013ccd9dc", "reply_count": 14, "vote_count": 2, "bowl_id": "564a5cdb94887803001dd07c", "bowl_name": "Accounting" }

Estate tax question. Elderly mother is on her way out, should we put me and my sisters name on the house deed? Does this make sense from an estate tax perspective?

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There are sooo many variables so it is difficult to answer this question. The biggest question is competency, would a court deem your mother competent enough to enter a land sale contract? Things to think about: will there be gift tax consequences? Are there reasons you’re attempting to avoid estate tax, like your moms estate is close to the exemption amount so you’re trying to get rid of property to avoid it or is this the only property that would require probate? Are there family complications that could be a problem? Both you and your sister will then be on the hook for property taxes, maintenance, etc. are one of you more responsible than the other, or do one of you have creditors that could try to go after it? Has the property increased a significant amount since the first purchase? For instance, if it passes prior to death the kids take a carryover basis in the House, meaning you’ll take your moms basis. If it passes by will there is a stepped up basis, meaning you take the value of the property at that date (unless alternative valuation date is chosen). This triggers different capital gains taxes upon sale of the home. You should also remove your moms name rather than just adding your sister and you, but that might not be something she wants. Also note there are state tax issues that might come up. There are also other methods of accomplishing this easier, such as a transfer on death deed, irrevocable trusts, etc. all in all I would recommend consulting a tax attorney in your state to find the best way to do this or if it’s even recommended.

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I dont think anybody does this type of stuff on here, but figured some of you CPA's would know or have been through this

How large is the estate? No estate tax if Mom passes away and has a gross estate of less than 11.18m. I think making sure that a solid will is in place to avoid probate is key. Other issues posted above are important as well, but if all you care about is estate tax, mom should be fine if the estate isn’t above the AEA.

I believe the unified credit is so large that unless she had a lot of wealth estate wise there won’t be any tax

@EY1 a will doesn’t avoid probate, it just provides an outline to it.

Doesn’t it depend on the state, AA1?

No, I mean I guess it’s possible there is some weird state law that does this in some state (I’m looking at you Texas). But as my estate professor always says a will is a roadmap for probate, it does not avoid it. Without a will, state probate law controls. It’s similar to contract law if you think about it, yes there are default rules (that are different depending on the state) but you can change those default rules by contracting. Same with a will, without one you resort to state default laws, with a will you probate the estate according to the will. They only way to avoid probate is to die with no probate assets.

It's a house in New York, worth about 500k, was originally bought for 15k in the 60s...mother is in fine condition, just getting her ducks in a row. Was just curious what would be the best way to save on taxes. 1) Put the house in our names and we sell when she passes, 2)not put in our names and we sell when she passes, 3) she sells it before she passes and leaves us her profits under our inheritance, 4)she sets up some kind of trust We will be meeting with a tax attorney to discuss, just curious if the fishbowl community had some advice so we had an idea bc my mother is stubborn and likes answers asap lol 😊

Very interesting. Thank you AA1. I always get confused. Good luck, OP!

You also might want to think about Medicaid eligibility. You would want her to have the house at passing in order to get the step up in basis, but there might be ways to get that and Medicaid with the right planning (trusts).

Generally you can avoid probate using a trust, but a lot will depend on the laws in thae specific state. Strangely enough, I'm a New Yorker licensed in California. Consult an attorney that focuses on probate, will, and trusts in NY state.

Your original post says your mother is on her way out...later you say she is in fine condition. I don’t understand your situation.

How much does it cost to put assets in a trust? Ie. do I need to hire someone to file some forms every year? don’t have much assets, just two houses that worth maybe 1.5M total and wondering what is the best way to pass it on to children with lowest tax.

Usually 1500 to 3500, depending on the complexity.

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