Asset Transfer question. How do you transfer an asset like a house to avoid probate?

Question

Are there any particular rules of thumb in tranferring ownership of an asset like a house to a beneficiary prior to your death so you can avoid taxes and probate? What can and can't you do? Tks.

So if you just transfer the house over using a lawyer, is this realistic? Does there have to be a sale done? If so, is fair market price required? If not, what about gift taxes? Lots of questions...appreciate your help.

Answer 1

Buy a book on Trusts - great way to avoid tax etc but if the trust is not set up or run properly you will end up owing that tax and may be penalised more.

It’s definitely realistic; a lot of higher income users use trusts as a legit way to reduce taxes because any income the ‘trust’ makes (i.e. any rental on the house) is taxed at the beneficiary’s tax rate when it is payed out to them, rather than at the higher income earners rate but for the trust to work you have to think of it as being like a separate company. First, it has to be set up for a proper purpose (FYI: avoiding tax and probate is not a proper purpose), it has to be properly managed and administered (i.e. financial statements drawn up), and if it is your house that you are putting in trust, you can’t be the only beneficiary of the property otherwise the trust will be seen as a sham. Also because you sell or gift your house to the company it means you no longer have legal title to it (the trustees do), however as Kiki mentioned you can set it up so you can still benefit from the property i.e. you can have full use of it until you die then it will go to a nominated person, or any other condition you want to impose on it.

I don’t know the specifics if you live in USA, but in New Zealand/Australia where I am trusts that involve land need to be in writing so you will need your lawyer to draw up the deed for you and as far as taxes go – in NZ you can make tax free gifts of I think its up to $12,000 per year which means over say 15 or 20 years (depending on the value of the house) you can gift the house to the trust tax free.

Answer 2

My Dad Quit-Claimed his house over to me 6 months before he died. At that time the will he had made years ago became null and void. He also placed my name on his bank accounts jointly, there was no probate at all and no taxes. It cost him $75 for the deed at the attorney's office.

Here's a hint if you do this, make sure the home hazard insurance is transferred into your name as new owner. The insurance goes with the owner, NOT the house....

Good Luck!

Answer 3

A real estate attorney and CPA will help you greatly. I am an appraiser and I value property for estate settlement all the time. I believe there is a type of ownership that is called a "life estate" and it gives you full title when the people on the deed pass away.

Answer 4

You'll need a lawyer for this one, but my parents signed their house over to me recently. They have 'life use' of the house, and it only cost the lawyer's fee to do this. Now we won't have to worry about any estate when they pass away.
They still pay the taxes, just my name is on the deed as the owner.

Answer 5

i'd imagine that if he "gave you" 0.5 the residing house, that you'll run into present taxes. including you to the deed is in result transfering 0.5 pastime to you. you need to study with a actual sources criminal specialist.