Q: My mother owns property. Should my sister and I add our names or just probate it when she passes for tax purposes?
We have been advised that if she allows us to add our name to the property and the mobile home on the property it could be considered a gift and we would be liable for taxes. Would it be better to probate it when she passes? The property is only worth about $45,000.
A: You really have three options. One, create a life estate trust with the real estate (avoids probate, but is probably not cost-effective for your situation). Two, allow the property to transfer at probate; estate tax will very likely not apply, but probate takes time (usually 1-2 years and can be expensive if you/your sister do not act as the personal representative/executor). Three, gifting--the annual exclusion amount for gifts is now $14,000 per person AND the exclusion amount recalculates to 0 every year up to around $1 million in total gifts (that is your mother can gift only 14K for year 1 and gift 14K for year 2, etc.). You may want to consult with an attorney, but it is not required for the gift or probate transfer (it is for the creation of a trust).
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