Home Titles For The Elderly

Q. Is it better to have my elderly mother put my sister and me on the title of her home before she dies, or should she will the property to us?

A. It’s better to inherit the property than receive it as a gift while the donor is alive. The reason is with a will, the beneficiary or heir gets a new stepped-up cost basis for the property of its market value on the day the decedent dies. However, if your mother gifts the property to you and your sister while she is still alive, as donees you take over the donor’s usually low-adjusted cost basis. Then when you eventually sell the property, you and your sister will then have a larger capital gain tax on your sale profit. Here is a better alternative - have your mother deed title to her property into her revocable trust. While she is alive, she can sell or refinance her property. When she dies, however, the title passes directly to you and your sister without probate costs and delays. Another major living trust advantage is, if your mother should become incompetent such as Alzheimer’s disease, if her property was deeded into her living trust, you and or your sister as successors trustees can sell the property if needed to pay for your mother’s care.

Posted by Donald Urschalitz P.A. at February 17, 2004 03:38 PM