[WSBAPT] life estate

Mon Dec 18 14:37:48 PST 2017

Rachel:
In addition to Heather’s comments below, if Mom is elderly and has no long-term care insurance, the gift today of the property with a retained life estate would create a period of ineligibility for Medicaid assistance from the State. In addition, if Mom is receiving or becomes qualified for Medicaid assistance the State can recover the cost of the care provided by Medicaid, up to the value of her life estate, by placing a lien on the property at the time of Mom’s death.

Jane.

Jane G Bitz
Of Counsel
Wolff, Hislop & Crockett, PLLC
12209 E Mission, Suite 5
Spokane Valley WA 99206-4824
(509) 927-9700; FAX (509) 777-1800
jbitz at whc-attorneys.com<mailto:jane at jbitzlaw.com>
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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Heather deVrieze
Sent: Monday, December 18, 2017 12:55 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] life estate

Rachel,

I think there are several differences between a Transfer on Death Deed (TODD) vs. Quit Claim Deed Retaining a Life Estate.

First – a TODD is not a current gift requiring valuation and a gift tax return to report the gift.
Second – a TODD conveys no current interest now, possessory or otherwise, and can be revoked by the donor at any time while they are alive. The property can be sold with the owner/donor keeping all the proceeds. A remainder interest holder would be required to participate in a sale during owner/donor’s life.
Third – excise tax. If the property has debt, there may be excise tax due, and an excise tax affidavit will be required in any case.
Finally – basis. There is some confusion among tax professionals over whether a property interest received during life, but only fully possessory at death is entitled to a full step up in basis.

I can’t see a reason to use a life estate where a TODD is available to transfer property to a daughter at death.

Heather

Heather S. de Vrieze
Attorney-at-Law
[cid:image001.jpg at 01D013C2.30F35160]
3909 California Avenue SW
Seattle, WA 98116-3705
(206)938-5500
heatherd at westseattlelaw.com<mailto:heatherd at westseattlelaw.com>
www.westseattlelaw.com<http://www.westseattlelaw.com/>
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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Rachel Edmiston
Sent: Monday, December 18, 2017 11:50 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] life estate

From what I've been able to find, a life estate will do the same thing.  Is that wrong?

On Sun, Dec 17, 2017 at 3:01 PM, Bryce Dille <BryceD at cdb-law.com<mailto:BryceD at cdb-law.com>> wrote:
Why aren’t you using transfer on death deed so you preserve step up in basis on death of mother
Sent from my iPhone

On Dec 17, 2017, at 1:48 PM, Rachel Edmiston <rachel.edmiston at gmail.com<mailto:rachel.edmiston at gmail.com>> wrote:

Hi,

One of my clients wants to give her house to her daughter and retain a life estate for herself.  I thought this was done by filing a quit claim deed that retained a life estate, but I’m having a hard time finding a sample. Do any of you have one I could use as a guide?  I’d also appreciate any helpful tips you might have or warnings about pitfalls as I’ve obviously never done this before.

Thank you,

Rachel Edmiston

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Rachel Edmiston,
PO Box 13738
Mill Creek, WA  98082
T: 425-945-6333
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