QUESTION

Can an attorney transfer a title to another person to avoid taxes?

Asked on Aug 15th, 2013 on Estate Planning - California
More details to this question:
My sister is dying and wants to transfer title to her home to her daughter to avoid paying taxes. Her daughter has lived with her all her life and pays rent and many household expenses. Is this possible? How do we choose an attorney for advice on how to handle?
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12 ANSWERS

Business Planning Attorney serving Livonia, MI at Frederick & Frederick Attorneys at Law
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I guess the question I would have is "what taxes?" Does the IRS have a judgment against the mother? You need to be careful about not setting up a fraudulent conveyance. If set up properly, I would imagine this could be done. I would suggest considering a lady bird deed.
Answered on Aug 23rd, 2013 at 2:58 PM

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Thomas Edward Gates
You can transfer the property by Quitclaim Deed. The transfer can take place after her death without any tax consequences.
Answered on Aug 23rd, 2013 at 2:58 PM

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Commercial Contracts Attorney serving Boise, ID at Peters Law, PLLC
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Look for a real estate attorney. However if she is worried about estate taxes, she probably shouldn't. The Federal estate tax starts at $5,000,000 and Idaho doesn't have one. Also, if it gets passed through her estate, her daughter will get the stepped-up basis and if she sells, will have less capital gains to pay tax on.
Answered on Aug 23rd, 2013 at 2:58 PM

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I doubt your sister has an estate tax problem. She may not want to transfer the house now so that the house can step up in basis when she dies. Maybe she can do a trust. If possible ask friends and relatives for recommendations to good attorneys.
Answered on Aug 23rd, 2013 at 2:58 PM

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Neal Michael Rimer
An attorney can prepare a deed to be signed by the owner of the property (the owner's signature must be notarized, and therefore signed in front of a notary) but, the attorney cannot sign the deed or transfer the property by themselves and without otherwise having a power of attorney signed by the owner. A power of attorney to transfer real property must be signed by the owner in front of a notary as well and that power of attorney must be recorded with the county recorder as well. In analyzing a situation as you indicate, one must identify the tax basis of the real property owned by your sister. If the tax basis is low, or if the fair market value is less than your sisters tax basis, then it might be best to not make a transfer now but wait until death occurs. At death, the value of the real property is "stepped up in basis" to the fair market value as of the date of death. There is no "tax cost" to the step up in basis, assuming that your sister's estate is less than the equivalent federal unified credit, which is over $5,000,000 right now. There is no income tax on the transfer as well. In California, a transfer of a residence from a parent to a child is not subject to reappraisal for property tax purposes either. Therefore the property tax annual bill will remain about the same (only a 2% increase in value per year). When the real property basis is stepped up in value, the person inheriting the property then uses that tax basis to determine gain, if they sell the property. As an example, if your sister bought her real property for $100,000 many years ago and it is now worth $500,000, if you sister transfers the property to her daughter now, the daughter's tax basis is just $100,000. If she sells the house shortly after she obtains title, she will have to pay income tax on the $400,000 gain on the sale. If the property is transferred after death, then the tax basis to the daughter is $500,000 and a sale of the house shortly after death of your sister would result in no income tax since there would be no gain on the sale. In fact, with closing costs and expenses of sale, your niece would actually have a tax loss (capital loss) and be able to deduct that loss against her other income at least to the extent of $3,000 per year or to the full extent against capital gains from other income. An attorney who reviews this situation would normally look to create a living trust to hold title to the real property and your sister's other assets to avoid the probate costs in California. The probate costs are statutory but are usually much more expensive than the cost of creating a living trust and transferring the property to the trustee of that trust. Upon death, then a new trustee (successor trustee named in the trust) steps in and makes a distribution to the named beneficiaries in that trust without any court involvement and at very little cost and expense. All the above depends on your sister being competent at this time and able to sign documents. If that is not the case, then other alternatives are available, like a conservatorship, and obtaining a court order to allow for the creation of an estate plan to avoid the probate costs. Finding an attorney, or any professional for that matter, (CPA, insurance salesman, stock broker, doctor, chiropractor, etc) is all the same. Getting referrals to a professional is a good way to start. Ask friends and neighbors. As relatives. Ask a local bar association for a referral. Interview the attorney to see if you feel comfortable in dealing with that person. Try to determine if the professional seems to have the requisite knowledge to be able to assist you. After interviewing a few professionals, you should be able to decide who you believe you would like to work with. Don't make decisions solely on cost per hour. More experienced attorney's will charge more per hour but may cost less in the long run. Lot's of times, an attorney can charge a set fee for estate plann
Answered on Aug 23rd, 2013 at 2:58 PM

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Probate Attorney serving Las Vegas, NV
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What kind of tax? Estate tax? Only estates in excess if $5,250,000 pay estate tax. Probably your sister just wants to avoid probate. She should speak with an estate attorney about a pay on death deed leaving the home to her daughter.
Answered on Aug 23rd, 2013 at 2:58 PM

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Probate Attorney serving New Orleans, LA at James G. Maguire
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Louisiana has no inheritance tax, so tax avoidance is not an issue, but a transfer while she is living may avoid the need for probate after her death.
Answered on Aug 23rd, 2013 at 2:58 PM

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This might be a good idea, but usually isn't. First of all, don't deal with just the house. A plan made piecemeal usually isn't a good plan. See an estate planning attorney about Sister's whole estate. BTW, avoid paying what taxes? Oregon's estate tax kicks in at $1 million the federal, not until $5 million. For a majority of people, it's not the estate tax you have to worry about, and making gifts during your lifetime gives the done income tax problems (lower basis).
Answered on Aug 23rd, 2013 at 2:57 PM

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Taxation Law Attorney serving Glendale, CA at Irsfeld, Irsfeld & Younger LLP
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Es, this is possible, and I have done this sort of think many times. On the other hand, I don't know that I this case it will avoid taxes. In fact, because daughter will get a step-up in basis if she inherits but not if she receives by gift, this may cost extra tax in the long run.
Answered on Aug 23rd, 2013 at 2:57 PM

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Probate Attorney serving Roseville, CA
Partner at James Law Group
2 Awards
It is not necessary and will create more issues than if the daughter takes the property as an inheritance. This of course assuming the daughter is the only child/heir. At James Law Group we make every effort to respond to you quickly and efficiently. This means we may be responding to you from a mobile device. As you know, responding on these devices can result in typographical errors that my otherwise not occur. In order to provide this extra service, please be aware of this and excuse any errors that may be caused by responding in this forum. The content of this message is protected by attorney-client privilege.
Answered on Aug 23rd, 2013 at 2:57 PM

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The attorney can assist your sister - for her to transfer title to her house as you suggest - not so much to avoid taxes (in 99% of the cases there is no estate tax and in Michigan there is no inheritance tax) - transferring title would avoid the inventory filing fee in Michigan on the value of the home if it has to pass through probate. One way to choose an attorney is through word of mouth referrals from persons who have gone through this process - if you don't know anyone, then another way is to do some research to find a qualified and experienced attorney in your area who handles estate planning and real estate matters - these days Google Searches seem to provide fairly good results - but you should also at least phone interview the attorney to make sure that you feel comfortable with him/her.
Answered on Aug 23rd, 2013 at 2:57 PM

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Trusts Attorney serving Sacramento, CA at Law Office of Victor Waid
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Obtain the assistance of an estate planning attorney. There are no transfer taxes on property, maybe a gift tax.
Answered on Aug 23rd, 2013 at 2:57 PM

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