Life Estate, Probate, pre death sale?

[wjp]

What is the name of your state? Rhode Island

My mom is a widow, and currently is the only name on the deed of her
house. She has living sons, and we are wondering about what measures we
should take to prepare for the future.

We have been counseled to look at two options, (1) just adding the sons
name to the deed in addition to hers, or (2) putting the house in the
names of the sons and granting mom a "life estate" to it.

If we knew how things were going to play out in the years to come it
might be a more obvious decision, and I think (2) would win out. But
what we are struggling with is she is now starting to question how long
she might be able to stay in the house on her own, and may need to
"sell it and move into an independant living facility". Under that
scenarior I am not sure if either (1) or (2) makes sense, or what the
pros and cons to each would be. We certainly wouldn't want the sons to
be taxed on a portion of that sale, the proceeds of which will be used
to fund her care.

We aren't trying to hide her assets from the covernment for medicaid
purposes, she's fine with using th wealth she has accumulated for that
purpose.

So we're trying to balance avoiding probate and an easy transition of
assets if needed, against paying more in taxes or fees if she decides
to sell and it is not solely in her name. Any advice or links would be
appreciated.

 

[divgradcurl]

What is the name of your state? Rhode Island

My mom is a widow, and currently is the only name on the deed of her
house. She has living sons, and we are wondering about what measures we
should take to prepare for the future.

We have been counseled to look at two options, (1) just adding the sons
name to the deed in addition to hers, or (2) putting the house in the
names of the sons and granting mom a "life estate" to it.

If we knew how things were going to play out in the years to come it
might be a more obvious decision, and I think (2) would win out. But
what we are struggling with is she is now starting to question how long
she might be able to stay in the house on her own, and may need to
"sell it and move into an independant living facility". Under that
scenarior I am not sure if either (1) or (2) makes sense, or what the
pros and cons to each would be. We certainly wouldn't want the sons to
be taxed on a portion of that sale, the proceeds of which will be used
to fund her care.

We aren't trying to hide her assets from the covernment for medicaid
purposes, she's fine with using th wealth she has accumulated for that
purpose.

So we're trying to balance avoiding probate and an easy transition of
assets if needed, against paying more in taxes or fees if she decides
to sell and it is not solely in her name. Any advice or links would be
appreciated.

You'll probably want to talk with a CPA or an estate planning specialist to figure out what exactly is the best course of action. Transferring assets can be a problem if your Mom needs to go into long-term care, but most problems can be resolved through careful planning. There are also considerable tax issues with inter vivos (during life) transfers of real property; oftentimes probate provides for the lowest tax consequences, but that's why you'll want to talk with a CPA or estate planning specialist to figure everything out.