QUESTION
Should I create a trust or will to leave my house to my cousin?
Asked on Apr 11th, 2011 on Estate Planning - New York
More details to this question:
My house is paid off, when I die, I would like to leave my house to my cousin. Is it better to put it in a Trust or Will to eliminate the tax implications if she sells it?
4 ANSWERS
1 Award
If you would like your cousin to inherit your home if you pass on, you should have a living trust created and place your home within the trust so that your cousin can avoid the high costs and delays of probate. Also be inheriting your property, your cousin will be given a stepped up basis in your property and thus receive the most favorable tax treatment.
Answered on Apr 15th, 2011 at 11:23 AM
Criminal Defense Attorney serving Hillsboro, OR
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There is very little likelihood of having any tax implications on an inheritance. In fact, its better to inherit property in many cases because the beneficiary gets to avoid potential capital gains taxes in the future. A simple will is probably all you need. But you could do a trust and avoid a probate when you pass away. But, a simple will would cost about $500 and you can do it and forget about it. And a trust will be about $1750, and will take some maintenance over the years. However, the trust will avoid a probate after you die, and the probate can be $2,500 to $3,500 or so. BUT, of course you don't pay for the probate. So the question is whether you want to pay out of your pocket more now so that the person who inherits your property can avoid a probate. Or whether you just want to do a will and forget about it and let them deal with it themselves later.
Answered on Apr 13th, 2011 at 9:46 AM
Trusts and Estates Attorney serving Jacksonville, FL
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Law Office of David M. Goldman PLLC
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There is actually a third option you may consider. It is the enhanced life estate deed. Of the will or trust, the trust is typically a better choice but it also could be subject to creditor's claims unless you maintain the home as you homestead. The enhanced life estate deed would do the same as a trust but potentially it would not subject the property to creditors claims.
Answered on Apr 12th, 2011 at 10:58 AM
Theodore W. Robinson
Its actually better to leave it in a Trust so it passes outside of any estate proceedings and has no tax consequences initally. I don't believe there are any tax consequences when she sells it either, but more research would have to be done on that nuance since those rules and laws change quite a bit from year to year. Or perhaps speak to your accountant first. Good luck.
Answered on Apr 12th, 2011 at 10:27 AM