My parents own some raw land that they purchased for investment and placed it in a family trust to which my father is the trustee and my mother, brother, and I are the beneficiaries
. When thinking in terms of ease of transfer and least tax liability
, is it better to have this land in a family trust, to just transfer the deed before death, or to will the property
after death. I recently heard a comment about Capital gains tax
. It stated that land where the deed is transfered prior to death, the value is set at the parents original purchase price and the profit for which the property was sold above the original purchase price is subject to capital gains. The value of property that is willed is set at current market value at the time of transfer and only the profit for which the property is sold above current market value is subject to capital gains.
1)First of all is this true?
2)Is it best to keep the property in the trust, how is it transfered at the death of the trustee, and what benefits
does keeping it in the trust provide provide?
3)If a trust is not the best way then what is the simplest way with least tax liability to transfer property?
4)How are the three different ways to transfer (Family trust, transfer deed, & will) effected by estate tax
5)What are the individual tax rates
of both capital gains & estate tax?