Q: What should we do with my widowed mom's house to protect the heirs against capital gains upon her death?

A: The PA "death tax" on an Estate, when the heirs are the children of the deceased, is like five percent of the fair market value of what's distributed. No heavy tax.

The Federal 'unified tax and estate' tax has a deductible of several million, so you needn't concern yourselves with that.

On top of the low PA "death tax", the heirs get a 'stepped up basis" in the things distributed, e.g., the house, so while the Estate (usually the payor, although the tax, if not paid by the Estate, is charged to the heirs) pays five percent on the house, the heirs enjoy a new tax basis in the property which will be the FMV that the Estate (with its Estate Tax Return and Estate Inventory) assigns to it.

In my opinion, the foregoing is a golden egg, taxwise.

There are several insurance companies and like entities out there who offer "free" trust agreements, etc. They may tell you that you or the Estate saves taxes with the use of those, but those documents don't achieve the ends often pushed.

In my opinion, you and the other heirs will enjoy the best available with your inheritance by leaving things as they are.

It is usually a sound idea to get a "second opinion", so speak to an experienced attorney/accountant about the looming tax issues and note the recommendations. Ask specific questions.

A: From the information given, it appears that the best thing to do to protect against capital gain tax on your mother's house after her death is to do nothing. If she holds ownership of the house until her death, there will be stepped up basis for calculating capital gain. That is, the capital gain would only be gain that occurs after her death. If the house is sold soon after her death, there will likely be no gain at all.

A: I would add, that you should consult with an experienced estate planning attorney to get more specific advice for the totality of your mother's situation.