POPSGIRL said:
Pops Dying With Cancer And Can`t Leave The House.he Has A Will Leaving His Estate To 4 Of Us Children.he Is Worried About His Things Being Tied Up In Probate.i Am His Power Of Attorney And Listed As Executer Of Will.he Had Me Added To Bank Accounts As Co-owner So I Could Take Care Of Things After Death,and Have Access To Money,but He Still Worries Probate.if He Had A Living Trust Would The Children Be Liable For Taxes On Sale Of House Proceeds?help Me Advice Him So He Has Peace Of Mind!
Easy with the Shift key. You don't need to capitalize the first letter of every word. My fingers start hurting just thinking about stretching for that Shift key so often.
A Living Trust has no effect on taxes. The assets probably can be distributed more quickly from a Living Trust, but unless Dad has some very complicated estate, probate likely won't be any more costly than a Living Trust. Someone more familiar with Maryland probate procedures would have to make that call.
You don't say what kind of taxes. Unless Dad has a very large estate (over $1.5 million in 2005 and increasing through 2010), the estate won't be subject to federal estae tax. Maryland exempts transfers to children of the deceased from the Maryland inheritance tax.
As for income tax, most assets, including a house, receive a step-up in cost basis to their value on the day of death of the decedent. If you sell the assets reasonably quickly, it is likely that little or no federal income tax would be due from the sale of any assets. I don't know Maryland income tax law, but I wager that it follows federal tax law in this respect.