Legal Question in Wills and Trusts in Tennessee
trust, quit claim, or what? My father can't affor his mortgage
My father can't afford his mortgage. Me and my siblings are wondering if we pay off the balance of the loan, should we set up a trust and have him quit claim the property to the trust? what tax consequences will will have when he dies?
1 Answer from Attorneys
Re: trust, quit claim, or what? My father can't affor his mortgage
Is this trust revocable or irrevocable? Who would be the settlor of the trust, your dad or you? You always have to watch the tax consequences of making a gift. If the trust is irrevocable or is one in which he is not the settlor, then the gift results in passing the low basis to the recipients, potentially requiring payment of capital gains tax instead of enjoying a stepped up basis. Perhaps look into life estates.
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