[USER]

I’ve seen trusts discussed before but wanted to see if anyone had insight on my specifics.

My mother is not in good health and we’ve been discussing her estate. I am an only child and my father passed away a long time ago.

My mother’s house is fully paid off. She wants to just add my name to the house, and doesn’t want to go through the trouble and expense of setting up a revocable trust.

In my case, the house is unlikely to sell for more than $250k more than she bought it for, so I don’t know that the step up cost basis really matters as far as capital gains. I don’t have any debt other than my own house.

What are the other reasons that she shouldn’t just add my name?

I’m trying hard to convince her that that isn’t the best option.

[Joe]

You need to talk to a CPA, but I don’t think the exclusion applies since it’s not your primary residence (for two of the last five years).

[Daisy]

Stepped up basis would definitely save you in taxes.
My understanding is that if your mom bought the house for 100k, she adds you now, she passes, then you sell it for 255k, you’d have to pay 155k in capital gains taxes.

If she does not add you now, she passes, you’d inherit the house at its current value, 250k.

If you sell it a month later for 255k, you’d pay capital gain taxes on 5k instead of 155k.

[Lori]

The $250K is for your primary residence. Step up basis matters- talk to a CPA and estate lawyer.

The upfront costs will save you $$ in the long run.

[Valerie]

If she has to go in a nursing home you will be forced to sell it for Medicaid. You don’t get the stepped up basis if your name is on it, it needs to go into a trust.

I just set up my trust this week and the lawyer went into detail all the reasons why nobody should ever put their children on the home.

[Sean]

I recommend talking to a local lawyer. There are many considerations when transferring real estate from one generation to another.

[Hilary]

Yes, talk to an attorney in CT – I think you can set up to transfer deed upon her death (not sure that it has to be in a trust) and you inherit the house at value upon her death – which I think would give you most flexibility if you ended up wanting to keep and rent it or whatever …

[Leslie]

She can convey the house to you and retain a life estate. No probate and you get a basis step up.

[Katrina]

Research a Lady Bird Deed (or ENHANCED life estate deed) if your mother lives in Florida, Michigan, Texas, Vermont, and West Virginia.

[Mark]

You don’t need a trust. Google “life estate deed”. Basically it adds you to the deed while guaranteeing her the right to live in the house until she dies.

And when she passes it will transfer full ownership to you, will bypass probate and will give you a step up in basis on the house.

It seems like a no-brainer in your situation but you should contact an estate attorney in CT to be sure.

[Nicole]

What state are you in? Instead of a trust she can just do a transfer on death deed. Very easy.

You do not want your name on the property while Mom is alive.

[Author]

Posts