[WSBAPT] life estate

Tue Dec 19 11:29:20 PST 2017

So, let me see if I’ve got this right.  The problems with a life estate are
that the person receiving the house has to pay a gift tax, the life estate
holder won’t be eligible for Medicaid for 5 years, Medicaid can recoup some
costs by putting a lien on the life estate holder’s house, all parties
would have to consent to selling the property and would be entitled to the
proceeds, and if there’s a debt due, the grantor would pay an excise tax.  But
there is a step up in tax basis when the holder of the life estate dies and
the house doesn’t have to go through probate.  Is that right?  I’ve tried
talking the client into a TODD before, but based on this discussion, I
think I’ll try again.

Thank you,

Rachel Edmiston

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On Tue, Dec 19, 2017 at 11:04 AM, Mike Winslow <mike at winslegal.com> wrote:

> Thanks for that clarification, Kate. I stand corrected.
>
> Good to know.
>
>
>
> Michael A. Winslow
>
> 1204 Cleveland Ave.
>
> Mount Vernon, WA 98273
>
> Ph. 360-336-3321 <(360)%20336-3321>
>
> Em. Mike at winslegal.com
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> This message is from an attorney, so it’s confidential. If you are not the
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>
> *From:* wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.
> wsbarppt.com] *On Behalf Of *Kate Szurek
> *Sent:* Tuesday, December 19, 2017 10:04 AM
> *To:* WSBA Probate & Trust Listserv
> *Subject:* Re: [WSBAPT] life estate
>
>
>
> Transfers with retained life estate bring the property into a decedent’s
> taxable estate, under IRC § 2036.  Thus, step-up in basis on death.
>
>
>
> Kate
>
>
>
> *Kate Szurek*, J.D., LL.M.
>
> kate at skagitlaw.com
>
>
>
> [image: SkagitLaw_Signature (2)]
>
> *Skagit Law Group, PLLC*
>
> P.O. Box 336 / 227 Freeway Drive, Suite B
>
> Mount Vernon, WA  98273
>
> 360.336.1000 <(360)%20336-1000>
>
> 360.336.6690 <(360)%20336-6690> (fax)
>
> http://www.skagitlaw.com
>
>
>
>
>
>
>
> *From:* wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.
> wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com>] *On Behalf Of *Mike
> Winslow
> *Sent:* Tuesday, December 19, 2017 8:55 AM
> *To:* 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com>
> *Subject:* Re: [WSBAPT] life estate
>
>
>
> The use of the QCD, with reserved life estate, will result in loss of the
> step up in tax basis at Mom’s death (check with CPA to verify this). This
> is a significant benefit to lose for daughter. CYA letter if you go this
> route.
>
> Using a TODD avoids probate transfer of the house and retains the step up.
>
>
>
> Regardless of approach, Daughter should be documenting now mom’s care
> needs, as the rendering of care by daughter, under circumstances which
> allow mom to avoid nursing home care (saving the state and taxpayers money)
> can allow daughter to avoid a later Medicaid lien if mom becomes
> institutionalized. Jacob Menashe or others on this list could advise
> further about how to meet those requirements. Preplanning on this issue
> will save trouble and money later.
>
>
>
> Michael A. Winslow
>
> 1204 Cleveland Ave.
>
> Mount Vernon, WA 98273
>
> Ph. 360-336-3321 <(360)%20336-3321>
>
> Em. Mike at winslegal.com
>
>
>
> This message is from an attorney, so it’s confidential. If you are not the
> intended recipient, it’s too late to stop reading this message, but you may
> not use it for any improper purpose. Huge Disclaimer available upon request.
>
>
>
> *From:* wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.
> wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com>] *On Behalf Of *Rachel
> Edmiston
> *Sent:* Monday, December 18, 2017 4:51 PM
> *To:* WSBA Probate & Trust Listserv
> *Subject:* Re: [WSBAPT] life estate
>
>
>
> The plan is for the daughter to move in with her and take care of her so
> that she doesn’t have to move into an assisted living facility.  Since
> she’s in her late 60s, she’s not expecting to meet Mr. Right, but you never
> know.  I’ve explained to her that if she wants to sell the house later on,
> she would need her daughter’s consent.  I also explained that her
> daughter’s creditors could reach the house, but again, she doesn’t think
> this will be a problem.
>
>
>
> On Mon, Dec 18, 2017 at 3:16 PM, Marcus Fry <mfry at lyon-law.com> wrote:
>
> Josh,
> Neither will she with a transfer on death deed.
> Rachel,
> I think you need a better understanding of client's goals. What if your
> client wants to move into an assisted living facility? Does she have other
> resources to pay for it? What if she meets the man of her dreams and she
> wants to sell and move away with him. With a life estate, she has no
> authority to direct the sale of house. Lastly, what if her daughter has
> creditor or marital issues, does she want the house exposed to those?
> Marcus Fry
> Lyon, Weigand & Gustafson P.S.
> Yakima, Wa.
>
>
>
> Sent from my Samsung Galaxy smartphone.
>
>
>
> -------- Original message --------
> From: Josh Grant <jgrant at accima.com>
> Date:12/18/2017 2:46 PM (GMT-08:00)
> To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
> Cc:
> Subject: Re: [WSBAPT] life estate
>
> Clients will not start the 5 year waiting period for Medicaid eligibility
> as to this asset if they retain a life estate.
>
>
>
> *From:* Rachel Edmiston <rachel.edmiston at gmail.com>
>
> *Sent:* Sunday, December 17, 2017 1:44 PM
>
> *To:* WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
>
> *Subject:* [WSBAPT] life estate
>
>
>
> 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
>
>
>
> --
>
> Rachel Edmiston,
>
> PO Box 13738
>
> Mill Creek, WA  98082
>
> T: 425-945-6333 <(425)%20945-6333>
>
> F: 425-272-4294 <(425)%20272-4294>
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> --
>
> Rachel Edmiston,
>
> PO Box 13738
>
> Mill Creek, WA  98082
>
> T: 425-945-6333 <(425)%20945-6333>
>
> F: 425-272-4294 <(425)%20272-4294>
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> CONFIDENTIAL: ATTORNEY/CLIENT PRIVILEGED; ATTORNEY WORK PRODUCT The
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-- 
Rachel Edmiston,
PO Box 13738
Mill Creek, WA  98082
T: 425-945-6333
F: 425-272-4294

CONFIDENTIAL: ATTORNEY/CLIENT PRIVILEGED; ATTORNEY WORK PRODUCT The
information contained in this email is intended for the individual or
entity above. This email is protected by the Electronic Communications
Privacy Act, 18 U.S.C. Sections 2510-2521 and is legally protected by the
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communication to others; also, please notify the sender by replying to this
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