Legal Question in Elder Law in North Carolina

Re: Transfer of Property

Assuming that the mother is competent (has the mental capacity needed to sign a legal document), then she certainly can transfer title to the son. As far as tax ramifications, an outright gift will cause the son to take mother's "tax basis" in the property. This means that if he later sells the property, he will pay capital gains tax on the difference (gain) between the sales price and what mother paid for the property. Also, mother will have to file a federal and state gift tax return. If mother retains a "life estate" interest in the property, then she will continue to have the right to use the land for the rest of her life and the son will benefit from a "stepped up" basis in the property. This means that if he later sells the land, then he will pay tax on the difference between the sales price and the value of the land on the day that mother died.

Depending on mother's age and health condition, you may want to consider the legal ramifications of such a transfer if there is a chance that mother might need long-term nursing care or Medicaid. If that is a possibility, then transferring the property could disqualify her for government assistance. I strongly recommend consulting with an elder law attorney skilled in the area of Medicaid planning if this is a possibility.