Legal Question in Wills and Trusts in Texas
My mother set up a trust in 1998 that provides for her estate to be divided equally amoung her 8 adult children when she dies. She now wants to make sure that her only son (who moved into the house with his wife 4.5 yrs ago to care for Mom) gets the house & property. Would it be better for her to give or sell the house to her son before she dies, or should she have the trust amended?
1 Answer from Attorneys
I would have to read the trust documents. There are a few things to consider:
1. If she gives the property by will, or by death, then the recipient would have a stepped up basis in the house. (This can mean significant tax savings if/when the child sells the house in the future.) IOW, if the house is passed by death, the recipient's "basis" in the house (meaning the value of the house) is the value calculated at the date of death. If the house is transferred during her life, then the recipient's basis in the house is the price which she paid for the house. The kicker comes in when the child tries to sell the house. The profit would be calculated on the child's basis in the house. The higher the basis, the less the profit, the less the taxes.
2. If the other children aren't in agreement on the one child getting the house to the exclusion of the others, they may be able to claim undue influence.
3. If mom is on Medicaid, or planning to apply for Medicaid, the transfer would have to be done in a very specific manner, in order to avoid violating Medicaid rules (and potentially disqualifying her from receiving benefits or subjecting the house to a Medicaid Estate Recovery.)
In short, mom should speak with an elder law attorney.
Dave
http://leonlaw.com