I have an estate with about 50K in equity at current values. I’d like to pass it to one of my two sons before I die. He will be making the mortgage payments (not assuming the loan) and I will want to be sure it goes to him. My question is in two parts:(1) What’s the best way deed it to him with minimum taxes and would a non-revocable trust work here?(2) How can I make sure my second son is equally awarded? For example, all else being equal I figure he would owe my second son half the equity, or 25K. Assuming we all agreed that that was fair, couldn't it all go bad, if for example my first son couldn’t make the payments for whatever reason and the bank foreclosed?
State/Country relating to question: Washington
Anything can always go bad. ONe way would be to go ahead and transfer the property to them now and you take a long term lease. I don't see 50K being worth the expense of a trust. They could enter into a "buy sell" contract that would determine what would happen if things go "bad" and how the equity in the house would be determined at the time of your death. Whatever you do have an attorney draft it so that it is correct. Be aware that any transfer at this time will not give them the step up in cost basis for tax purposes and make you ineligible for Medicaid for a certain period of time if you file in the next five years.
Then would you advise against a revocable trust as well. They don't seem to be too difficult to set up? "Make me ineligible for Medicaid"? How would that come about?
Medicaid has a five year lookback period. If you gift assets to someone during that period, then it makes you ineligible for a certain length of time. I think that trusts are overused when there are other ways. Most attorneys would not advise a trust for 50K in equity.
Attorney with experience in wills, estates and trusts
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