Legal Question in Wills and Trusts in Georgia

Your questions are not appropriate for a message board set up for fairly simple Q&A. It would also be an absolutely horrible idea to try to rely on advice on anonymous message board where people have limited facts, and an even worse idea to try to do something yourself. You can't post enough facts here to get a meaningful response. If you want it handled correctly, and accomplish the purpose, your father needs to see a lawyer who handles these matters as a primary practice. When people screw up transactions like you describe, the damage is usually discovered after it is too late to correct (and many times it cannot be corrected).

There are many ways to transfer property, a trust usually being the most expensive and least necessary. Most estates are too small to owe taxes, so if that's the case, other means should be looked at.

There are some complex pros and cons to every option, be it deeds with life estates, trusts, wills, etc, and the answer also is affected by what else he owns and how amicable the family is.

Step one is to see a lawyer, who can discuss the details and make solid recommendations once he has sufficient facts.

Feel free to call me to discuss this further.

Your father, if he is mentally competent, needs to see an experienced estate planning attorney. His options are generally as follows. Bear in mind, however, that I do not have knowledge about his assets and debts and that my advice is general only and could change based on his circumstances.

(1) If your father owns the land free and clear, he could deed it to his children outright. Where you got the nonsense about $1.00 is beyond me. This is wholly unnecessary. This is my least favorite option as it is never a good idea for more than one person to own land and it is unlikely that the children will agree on everything all of the time.

(2) Your father can make a will which includes a testamentary trust. In his will, he could leave the house to the trust and set up trustees. There are laws governing this and the trust must be carefully drafted so it does not run afoul of the rule against perpuities, if any, in the state where your father resides and the land is located. The trust pays the property taxes, any other taxes (a trust has to file a tax return just like a human) maintenance on the property and insurance - however, the trust has to have some income. How is the trust to be funded besides the land? Your father needs to consider this.

(3) Same idea but instead of a testamentary trust your father sets up a revocable living trust NOW to reduce his assets for probate. Whether probate is an issue and whether a revocable living trust is set up will depend on your father's assets, his goals, whether he wishes to disinherit a child or whether he owns multiple properties in the same or other states. This is the most expensive option, but there are circumstances where the expense is justified.

Right now, the Bush era taxation level is extended until 2012. Married couples can exempt (exclude) up to $10 million; single individuals up to $5 million. If your father has significantly less in assets he does not need to worry about tax issues. If he is not disinheriting a child and does not own multiple properties in other states, he may not even need a revocable living trust My rule of thumb is $1 million - if you have $1 million in assets, you can afford to pay an estate planning attorney and should do extensive estate planning. If your father has more than $5 million then he definitely needs to see an attorney as there are things which can be done to reduce his taxation level (for example, he can gift up to $13,000 to each of his children to reduce his estate).

There are too many other consequences to discuss here. Don't be cheap thinking you will save a buck. Paying an attorney for an hour of advice will be less expensive in the long run than going to Legal Zoom, getting a do-it-yourself package and messing things up.

I have no idea about a "land trust" other than as I have outlined. There are no tax consequences to your father conveying land to a testamentary or revocable living trust. If the property is mortgaged, he can also convey the land to a revocable living trust without violating the due on sale clause. However, if the property is mortgaged, then it cannot simply be conveyed away for $1 or no dollars. Regardless, there will be tax consequences if this occurs. Anything over the $13,000 is subject to gift tax, although there is a lifetime exclusion and I don't know if your father has made gifts in his lifetime or intends to make such gifts as part of his estate plan. Gift taxes, if any, are paid by your father as donor of the gift.

Because of the tax issues, it is far better for the heirs to inherit land, as through a will, as they get a step up in basis. It becomes an issue if the land is ever sold, as it will reduce any capital gains. There should be no or less tax issues if the land is conveyed to a revocable living trust.

Finally, if the land is conveyed to one or more of the children, whoever own the property can do what they want with it. That means they can sell it, lease it or decide who gets to use it and if they have a falling out with someone, its too bad. A life estate might be a good idea (it is where the owner conveys the property to someone else but keeps the ability to use the land in his/her lifetime). The problem I have encountered with life estates is that the donor/life tenant and remainderman have a falling out and the donor/life tenant wants to get the property back. The donor/life tenant can't do that unless the remainderman consents. Where the remainderman refuses, the donor/life tenant is stuck.

Bottom line - your father needs to see an estate planning attorney and needs to set up a revocable living trust or testamentary trust assuming he is still mentally competent.