My mother wants to transfer house to me for tax purposes but....?

Question

My mother has a house and in the event she passes away (God forbid) we don't want to deal with the probate- what's the best and cheapest way to avoid it? Transfer the deed to me currently or for her to draw a will naming me as the beneficiary for the house?
If so, how do I do any of those things ?

Answer 1

You cannot avoid estate and gift tax if it applies to your mother. Estate and Gift Tax on comes into play if your mothers total lifetime gifts or estate upon her death exceeds something like $660,000 if single and 1.2 million if she was married. If you fall in this category - go hire an attorney (she has enough money).

If not then by transferring the property prior to her death, you will assume your mother's basis and pay capital gains tax on her basis (profit is based on amount over what she paid for the property) if you ever decide to sell the property. If your mother passes the property to you through a will - at her death - you will get a stepped-up basis for capital gains tax if you sell the property (15% of the "profit" you make above the MARKET VALUE at the time of your mother's death).

Another problem you should consider - medicare/medicaid or other liens that could fall against the property if she keeps it until she passes away.....

As you might guess from the above very short-hand responses --- you need to go see an attorney.

Answer 2

There is no way to avoid the taxes. A living trust will essentially pay the taxes on it now (or so I understand). Giving it to you now would require capital gains or gift taxes. Inheriting it will incur taxes only if the inherited amount is over a minimum $$ amount. I suggest you look into a living trust or a simple will.

Answer 3

Transferring the deed to you right now or showing a low 10.00 sale is the best course of action but talking to an attorney is a must.

Answer 4

my parents did the same thing for the tax issue... there is something called a 'living trust' that the house can be put in to... in the event of her passing, the house title transfers to you..

talk to an atty for the details