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Estate Tax
Probate & Non-Probate Assets
Wills
Durable Power of Attorney
Medicaid
Income Tax: Step-Up In Basis
Gift Taxes
Titling Your Assets
Living Trusts
Avoiding Probate Court
Living Will &
Healthcare
Power of Attorney
Organizer of Information, Document Locations, and Funeral Arrangements
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Generally an older person’s assets should remain in their name, unless full skilled care nursing becomes a reality or is greatly probable.
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To learn more about
Planning Your Estate
Contact Us to Schedule a Visit
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Often clients consider transferring ownership of assets to their children. They are concerned about estate tax, Probate Court, or nursing home expenses, or some combination of the three. Many do not understand the following factors:
- • Step-Up In Basis For Income Tax
- • Probate & Non-Probate Assets
- • Estate Tax Allowable Exclusion Amounts
- • Medicaid Planning
My recommendation is generally that parents keep assets in their names and not make transfers to their children, unless certain circumstances exist. The reasons are:
| 1. | Liability
Much can happen if the child has assets in their name. The child could: 1) go through a divorce, 2) have an at-fault accident for which a liability claim could be made, 3) become disabled and need nursing care themselves, or 4) die. Any of these circumstances could adversely affect the parent who was ostensibly just trying to protect assets for the child.
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| 2. | Adverse Income Tax Consequences
With a gift, the donor's basis transfers to the donee and could cause adverse income tax consequences on the sale of the asset by the donee. See Income Tax -- step-up in basis.
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The most important focus is making sure that the parent is cared for, and secondly, that maximum assets are passed to estate beneficiaries after payment of all taxes and other expenses.
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