The worst time to discuss your parents’ financial planning is either after they become infirmed, or during Thanksgiving dinner, as you may have just found out.
It’s an important issue, to be sure. No, not just because you want an inheritance (as your sisters suggested), but because you care about your parents and want to make sure they are taken care of.
How can your parents be assured of keeping their home, until they die? How can their heirs be assured of receiving the biggest inheritance they deserve, or put another way, how can their heirs be assured of paying as little inheritance tax as possible?
I suggest you and/or your parents talk with a tax adviser. Now, versus later.
Here’s one bit of information:
Question: What is the best way to hold title to my residence to avoid probate … ? –Steve L.
Answer: … Usually, in a revocable living trust. While you are alive you can buy, sell, refinance and manage your living-trust assets because you are the trustor, trustee and beneficiary.
If you become incapacitated, your successor-trustee takes over and manages your assets.
After you die, your living-trust assets are distributed without probate costs or delays, according to your living-trust instructions.
It can be financially disadvantage to go on the property’s title, now, before your parent passes away. If you do, my understanding is that the value of the property is then “stepped-up”, meaning when you actually sell, only the difference between the stepped-up amount (your new cost basis) and the sale amount is yours, tax-free, instead of the whole amount.
See a tax adviser.
Complete story: Living trust streamlines real estate inheritance – By Robert J Bruss, Inman News, by way of The Boston Globe