Legal Question in Real Estate Law in Ohio

Residence transfer terms

Several years ago a couple deeded their residence to their children while retaining rights as life estate tenants. They now want to sell the property, but to get the gain to be exempt from federal income tax (sale of primary residence)they must be the owners. They contacted the attorney and explained the situation. The attorney drafted an agreement where the kids grant ''a joint life estate with remainder over in fee simple to the survivor of them, their heirs and assigns forever'' to the parents. The attorney says this is what they need and the CPA says it isn't.Who is right?


Asked on 2/20/04, 5:41 pm

1 Answer from Attorneys
Michael Buschbacher Michael Buschbacher Co. LPA

Re: Residence transfer terms

I'm not sure you gave us enough info.

Check with the CPA but I think one rule is that the parents own the residence 3 of the last 5 years. If they can't satisfy the requirement, then the deal doesn't work - now. However, if they have the property deeded back to them the time frame to qualify will shorten. Also there are questions in my mind about gift tax returns that should of been filed if the parents actually made a gift when deeding it to the children. Was the real intent to create a trust? Perhaps the attorney and the CPA should communicate.

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Answered on 2/20/04, 6:26 pm


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