Upstream Gift

[zddoodah]

Now I have a few questions:

1. Can the Agent (my Sister) later create a Living Trust that My Mom is the owner?

I think what you're talking about here is a situation in which your mother has given your sister power of attorney, and you want to know if, pursuant to that POA, your sister can create a trust of which your mother is the trustor. Correct? If so, the answer is that it depends on the scope of the POA.

Before My mom die (a few months), I will gift My Mom (through the Agent) the house, then the Agent will transfer it into the Living Trust. Is this okay?

What does "okay" mean? It's okay with me. If you're asking whether the agent would have authority to make the transfers, again, it depends on the scope of the POA. Also, for what it's worth, when you started this thread a year ago, you hypothesized that your mother would die in "a few months." Seems like that hasn't happened.

After my Mom dies, the House will be passed to my other siblings (including my Sister) tax free? (Step-up). Is it okay?

The first sentence here is not a question despite the use of a question mark. If you're asking how to make that happen, see below.

I'm not sure if My mom still be competent at the time I want to gift her the house. So using POA will resolve this problem. Am I correct?

What problem? If your mother isn't competent, she cannot grant power of attorney. If she makes a POA while competent and subsequently become incompetent, then the POA may terminate unless it is a durable POA.


A year ago, when you first started this thread, I and others told you in no uncertain terms: "You/your mother should consult with a local estate planning attorney." Haven't done that? If not, why not?

 

[Taxing Matters]

2. Before My mom die (a few months), I will gift My Mom (through the Agent) the house, then the Agent will transfer it into the Living Trust. Is this okay?

3. After my Mom dies, the House will be passed to my other siblings (including my Sister) tax free? (Step-up). Is it okay?

The reason is that I'm not sure if My mom still be competent at the time I want to gift her the house. So using POA will resolve this problem. Am I correct?

The transfer would not be illegal. It will not help you get a step up in the income tax basis in your property, however. In addition to the step transaction doctrine I mentioned earlier, in the case where you give appreciated property to your mother (either directly to her or to her revocable living trust) and then you get it back after she dies the house doesn't get a basis step up. IRS Publication 551, Page 10 explains that rule this way:

Appreciated property. The [step up basis] rule doesn't apply to appreciated property you receive from a decedent if you or your spouse originally gave the property to the decedent within 1 year before the decedent's death. Your basis in this property is the same as the decedent's adjusted basis in the property immediately before his or her death, rather than its FMV. Appreciated property is any property whose FMV on the day it was given to the decedent is more than its adjusted basis.​

That's the plain language explanation of Internal Revenue Code (IRC) § 1014(e). You say your mother will only live a few months more. If that's how things turn out then it is too late to get that step up in basis for the property in the transaction you described above.

 

[Upstreamgift]

I think what you're talking about here is a situation in which your mother has given your sister power of attorney, and you want to know if, pursuant to that POA, your sister can create a trust of which your mother is the trustor. Correct? If so, the answer is that it depends on the scope of the POA.




What does "okay" mean? It's okay with me. If you're asking whether the agent would have authority to make the transfers, again, it depends on the scope of the POA. Also, for what it's worth, when you started this thread a year ago, you hypothesized that your mother would die in "a few months." Seems like that hasn't happened.




The first sentence here is not a question despite the use of a question mark. If you're asking how to make that happen, see below.




What problem? If your mother isn't competent, she cannot grant power of attorney. If she makes a POA while competent and subsequently become incompetent, then the POA may terminate unless it is a durable POA.


A year ago, when you first started this thread, I and others told you in no uncertain terms: "You/your mother should consult with a local estate planning attorney." Haven't done that? If not, why not?

I think what you're talking about here is a situation in which your mother has given your sister power of attorney, and you want to know if, pursuant to that POA, your sister can create a trust of which your mother is the trustor. Correct? If so, the answer is that it depends on the scope of the POA.




What does "okay" mean? It's okay with me. If you're asking whether the agent would have authority to make the transfers, again, it depends on the scope of the POA. Also, for what it's worth, when you started this thread a year ago, you hypothesized that your mother would die in "a few months." Seems like that hasn't happened.




The first sentence here is not a question despite the use of a question mark. If you're asking how to make that happen, see below.




What problem? If your mother isn't competent, she cannot grant power of attorney. If she makes a POA while competent and subsequently become incompetent, then the POA may terminate unless it is a durable POA.


A year ago, when you first started this thread, I and others told you in no uncertain terms: "You/your mother should consult with a local estate planning attorney." Haven't done that? If not, why not?

The transfer would not be illegal. It will not help you get a step up in the income tax basis in your property, however. In addition to the step transaction doctrine I mentioned earlier, in the case where you give appreciated property to your mother (either directly to her or to her revocable living trust) and then you get it back after she dies the house doesn't get a basis step up. IRS Publication 551, Page 10 explains that rule this way:

Appreciated property. The [step up basis] rule doesn't apply to appreciated property you receive from a decedent if you or your spouse originally gave the property to the decedent within 1 year before the decedent's death. Your basis in this property is the same as the decedent's adjusted basis in the property immediately before his or her death, rather than its FMV. Appreciated property is any property whose FMV on the day it was given to the decedent is more than its adjusted basis.​

That's the plain language explanation of Internal Revenue Code (IRC) § 1014(e). You say your mother will only live a few months more. If that's how things turn out then it is too late to get that step up in basis for the property in the transaction you described above.

I think what you're talking about here is a situation in which your mother has given your sister power of attorney, and you want to know if, pursuant to that POA, your sister can create a trust of which your mother is the trustor. Correct? If so, the answer is that it depends on the scope of the POA.

That sounds good Zddoodah. I will make sure the POA will expressly provide for an agent to create, modify, or revoke a trust.


What does "okay" mean? It's okay with me. If you're asking whether the agent would have authority to make the transfers, again, it depends on the scope of the POA. Also, for what it's worth, when you started this thread a year ago, you hypothesized that your mother would die in "a few months." Seems like that hasn't happened.

She is 90 and still healthy but not for long. So I need to have a plan in place now so make sure when she is dying then the POA's Agent will receive the Gift (house) from me and fund the Trust.


The first sentence here is not a question despite the use of a question mark. If you're asking how to make that happen, see below.




What problem? If your mother isn't competent, she cannot grant power of attorney. If she makes a POA while competent and subsequently become incompetent, then the POA may terminate unless it is a durable POA.

Yes, I would make the POA a durable POA.


A year ago, when you first started this thread, I and others told you in no uncertain terms: "You/your mother should consult with a local estate planning attorney." Haven't done that? If not, why not?

Things happened, and I didn't have time

 

[Upstreamgift]

The transfer would not be illegal. It will not help you get a step up in the income tax basis in your property, however. In addition to the step transaction doctrine I mentioned earlier, in the case where you give appreciated property to your mother (either directly to her or to her revocable living trust) and then you get it back after she dies the house doesn't get a basis step up. IRS Publication 551, Page 10 explains that rule this way:

Appreciated property. The [step up basis] rule doesn't apply to appreciated property you receive from a decedent if you or your spouse originally gave the property to the decedent within 1 year before the decedent's death. Your basis in this property is the same as the decedent's adjusted basis in the property immediately before his or her death, rather than its FMV. Appreciated property is any property whose FMV on the day it was given to the decedent is more than its adjusted basis.​

That's the plain language explanation of Internal Revenue Code (IRC) § 1014(e). You say your mother will only live a few months more. If that's how things turn out then it is too late to get that step up in basis for the property in the transaction you described above.

I mentioned last year that I won't receive the house back. It will go to my siblings only.

 

[Upstreamgift]

I think what you're talking about here is a situation in which your mother has given your sister power of attorney, and you want to know if, pursuant to that POA, your sister can create a trust of which your mother is the trustor. Correct? If so, the answer is that it depends on the scope of the POA.




What does "okay" mean? It's okay with me. If you're asking whether the agent would have authority to make the transfers, again, it depends on the scope of the POA. Also, for what it's worth, when you started this thread a year ago, you hypothesized that your mother would die in "a few months." Seems like that hasn't happened.




The first sentence here is not a question despite the use of a question mark. If you're asking how to make that happen, see below.




What problem? If your mother isn't competent, she cannot grant power of attorney. If she makes a POA while competent and subsequently become incompetent, then the POA may terminate unless it is a durable POA.


A year ago, when you first started this thread, I and others told you in no uncertain terms: "You/your mother should consult with a local estate planning attorney." Haven't done that? If not, why not?

Thanks Zddoodah!
I will make sure the POA is Durable POA and will expressly provide for an agent to create, modify, or revoke a trust.
My mom is NOT dying but I don't know when or how soon it will happen. I just need to make sure the POA will make sure the Home is received and transferred to the Living Trust by the POA's Agent.

 

[Taxing Matters]

I mentioned last year that I won't receive the house back. It will go to my siblings only.

Then in that case you still have the risk for the IRS to apply the step transaction doctrine to eliminate the basis step up. That risk increases the closer the transfers happen before her death.