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Bill
Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3077
Experience:  EA, CEBS - 34 years experience providing financial advice
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My parents want my sister and her husband to get their ...

Customer Question

My parents want my sister and her husband to get their condo when they pass away. My sister and her husband want my children to get the condo after they pass, but don''t want to will it to them (I think they are afraid his family will fight for it). What''s the best way to do this in CA (community property sate)? I have thought about my parents creating a life estate for my sister and her huisband, but then we need to create a property trust. My parents eatate is around 1 million (condo is over half of it). SImpler would be my parents leaving it to all four as joint tenants with right of survivorship. However, my children are only 12 and my parents are 85. I don''t want them to be property owners when young. My children have very modest investment income and do not file tax returns.
Submitted: 6 years ago.
Category: Tax
Expert:  Bill replied 6 years ago.
After your parents pass away, your sister and her husband could establish a revocable living trust with your children as the remainder beneficiaries and put the condo in the trust. Upon your sister and her husband's deaths the trust would become irrevocable. The trust could contain provisions to hold and manage the condo until your children attained a certain age. The trust would not be part of the will and would avoid probate. Prior to their deaths, the trust could be revoked by your sister and her husband for any reason and the title on the condo could be changed to your children if desired (however, this would be considered a gift at the time).
Customer: replied 6 years ago.
Sorry, I was not precise enough in my question:

My sister does not want the condo in her ESTATE because of concerns about his family. My sister has no children. There are many nieces and nephews on his side; hust my children on her side.
Expert:  Bill replied 6 years ago.

Your parents could put the condo in a revocable living trust (or establish an irrevocable trust in their wills) now that would become irrevocable upon their deaths and they could designate your sister and her husband as successor trustees to manage the condo and collect income and upon their deaths the condo would be distributed to your children. The trust could also include provisions giving the trustees discretion to make distributions prior to their deaths or maintaining the assets until your children attain certain ages.

Will these options accomplish what you want to achieve?

Customer: replied 6 years ago.
I'm not sure this is any better than the life estate/property trust. My sister/parents do not want the property in a trust. My parents want my sister to have the condo to live in. My sister is the one who wants to keep the property out of her estate.
Expert:  Bill replied 6 years ago.
Some type of trust appears to be the best option to meet all of the objectives. A trust that is established outside of the will is not included in the probatable estate and is not public information that heirs would have access to. Other than a trust, I don't have any other suggestions.
Customer: replied 6 years ago.
My parents are trying to avoid setting up a trust. Their estate is very simple and small, and their income is small.

Thank you for your suggestions.
Expert:  Bill replied 6 years ago.

Your parents may be able to create a life estate deed in their wills for your sister with your children as remainder beneficiaries. However, this does not eliminate the problem of your children possibly inheriting the property as minors. Another option is a life estate deed with you and your husband as remainder beneficiaries. Then you could leave the property to your children in your wills. However, this does not accomplish all of the objectives as a trust would. Your parents should consult with an attorney in CA that specializes in real estate in order to explore the different options available other than a trust.

http://www.sandiegohomes-mls.com/realEstateInfo/estateOwnership/lifeEstate.php

http://www.calcpa.org/content/consumers/ask/2001/05.04.aspx

http://www.calcpa.org/content/consumers/ask/2004/04.02.aspx

 

 

Customer: replied 6 years ago.
I feel as though we've gone in a big circle. life estate with my children as benficiaries was what I mentioned we had looked at in my original question.

I guess we need to consult with an attorney in California.

Thank you

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