[WSBAPT] life estate

Mon Dec 18 15:58:32 PST 2017

Why not a revocable living trust with the daughter as successor Trustee and remainder beneficiary?  That way she would control the house during her lifetime and daughter would get a step-up in basis on inheritance.

Sara

Sara D. Longley, J.D., LL.M.

Attorney at Law

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Seattle, WA 98107

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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 3:38 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] life estate

Client wants to make sure her daughter will inherit her house after she dies.  She has one son that she’s disinherited, but she thinks he may dispute the will, so she doesn’t want to rely solely on a will to transfer the house.  She also wants to avoid probate to make it easier on her daughter.  I discussed TODDs, JTWROS, and quit claims with her, and the option she liked best was a QC with a life estate.   I think she likes the idea of giving her daughter some possessory interest in the house right now.  I mentioned it would cause problems with Medicaid planning and she said that wouldn’t be a problem, but I forget why.  

Rachel Edmiston

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On Mon, Dec 18, 2017 at 2:26 PM, Mike Winslow <mike at winslegal.com <mailto:mike at winslegal.com> > wrote:

If you are trying to do Medicaid planning with a QCD retaining a life estate in the parent, there is a whole set of rules and consequences about which you should become familiar, as well.

Maybe you could share with the list what the client’s goals are in seeking the transfer. What’s driving the process with this client?

Michael A. Winslow

1204 Cleveland Ave.

Mount Vernon, WA 98273

Ph. 360-336-3321 <tel:(360)%20336-3321> 

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From: wsbapt-bounces at lists.wsbarppt.com <mailto:wsbapt-bounces at lists.wsbarppt.com>  [mailto: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

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

3909 California Avenue SW

Seattle, WA 98116-3705                          

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 <mailto:heatherd at westseattlelaw.com> heatherd at westseattlelaw.com 

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From: wsbapt-bounces at lists.wsbarppt.com <mailto: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 <mailto: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

F: 425-272-4294

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