Q: Parents house left 2 me in trust. When I change the name on the house will my taxes go up or are they grandfathered in?
Trust was made in 2006. My father passed in 2017 and my mother is still alive. I understand that the house is now owned by the trust. But after my mother passes and I put the house in my name will the taxes on the house go up or will I pay the rate at which my parents were paying.
Not asking about real estate taxes after death. Will not be selling the property.
Just want to know will the city taxes go up after I take ownership according to the revocable trust and have the home put in my and my wife's name, or will the taxes stay at the same rate.
A:
Assuming you are the beneficiary or contingent beneficiary of the trust taxes will not necessarily be uncapped.
Beginning in 2015, a distribution of residential real property from a trust to a distributee who is settlor or the settlor’s son or daughter, (among other relations) AND if the residential real property is not used for any commercial purpose following the conveyance, is not considered a 'transfer of ownership' under Michigan law. See MCL §211.27a(6)(d)(ii).
I however STRONGLY URGE YOU to consult with an use the services of a local licensed attorney to accomplish that distribution since there are many pitfalls to the unwary if you do this incorrectly, don't file the appropriate affidavits and homestead forms etc. Don't try to be 'penny wise' and end up being 'pound foolish' as the old saying goes.
-- This answer is offered for informational purposes only and does not constitute legal advice or create an attorney/client relationship.
I am licensed to practice in Michigan only. Please seek competent local legal help if you feel you need legal advice
A: You did not ask a question more important than local real estate taxes. The real question here is what is your basis in the house when you receive it. If the house is in trust and it was a revocable trust, then at your dad's death, his part of the real estate would get a step up in basis to the value at his death. When mom dies, then her share would be stepped up to the date of death value for her 1/2 share. The basis of each parent would be added together to give you your basis for calculating gain on the sale of the property. Note, however, if you never sell the property during your lifetime you have no gain to worry about and your heirs would get a step up in basis at your death. Or if you were to sell after living in the house as your primary residence for a number of years, the first $250,000 ($500,000 if you are married) of gain on a lifetime sale by you would be not be taxable under the primary residence rules.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
