If you have a TOD for your home are there any negative tax issues?
When the second spouse dies and the 2 kids inherit the home 50/50, if the parents purchased it at 400K and it is now 1M the kids can sell it for the 1M with no cap gains, correct?
TOD [Transfer on Death] for home and taxes
TOD [Transfer on Death] for home and taxes
K.I.S.S........so easy to say so difficult to do.
Re: TOD for home and taxes
The potential disadvantages are:
1. If the house goes to them outright instead of in trust, it will be included in their estates, and will be subject to their creditors and spouses, and Medicaid.
2. Unless there are enough other assets in the estate, the estate won't be able to pay any cash bequests.
3. If there aren't enough assets in the estate, and one child doesn't cooperate, it will be difficult to pay debts, taxes and expenses.
4. It will be complicated if a child dies first.
5. The estate won't be able to deduct the selling and maintenance expenses.
1. If the house goes to them outright instead of in trust, it will be included in their estates, and will be subject to their creditors and spouses, and Medicaid.
2. Unless there are enough other assets in the estate, the estate won't be able to pay any cash bequests.
3. If there aren't enough assets in the estate, and one child doesn't cooperate, it will be difficult to pay debts, taxes and expenses.
4. It will be complicated if a child dies first.
5. The estate won't be able to deduct the selling and maintenance expenses.
Re: TOD for home and taxes
Thank you for your response.
The only other thing they will be inheriting are our POD financial accounts so it seemed simple to just do a TOD for the house.
The only other thing they will be inheriting are our POD financial accounts so it seemed simple to just do a TOD for the house.
K.I.S.S........so easy to say so difficult to do.
Re: TOD for home and taxes
Only a few states allow this. And it is usually called a beneficiary deed. Filing it with the county recorders office may cost you a small recording fee.
Re: TOD for home and taxes
California allows it.
K.I.S.S........so easy to say so difficult to do.
Re: TOD [Transfer on Death] for home and taxes
The main disadvantage of ToD if you have it for your property in a state that annoyingly doesn't recognize ToD.
Under current law, proposals to eliminate it aside, yes there is still a step-up.
Personally I think 50/50 is asking for trouble but whatever.
Re: TOD [Transfer on Death] for home and taxes
Just curious what you see as the problem going 50/50. I would imagine you see a possible fight over to keep it or sell ?
What would your solution be? Leave the majority to one?
K.I.S.S........so easy to say so difficult to do.
Re: TOD [Transfer on Death] for home and taxes
My dad's house was TOD and when he died it was a simple process of filing an affidavit and death certificate with the county. My brother and I were 50/50 on the house and sold it with no problems less than a month after dad died.
My current home is set up the same way - splitting ownership equally among our three kids. Obviously, problems can happen when kids inherit an asset like a house. I haven't come up with a decent solution that would fix these problems and would welcome alternatives. Right now, we have our estate set up so that probate won't be necessary (i.e. TOD/POD).
My current home is set up the same way - splitting ownership equally among our three kids. Obviously, problems can happen when kids inherit an asset like a house. I haven't come up with a decent solution that would fix these problems and would welcome alternatives. Right now, we have our estate set up so that probate won't be necessary (i.e. TOD/POD).
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Re: TOD [Transfer on Death] for home and taxes
Mom recently changed her home/acreage to TOD to my sister and I, as her financial accounts already are. Sister and I get along fine so no issue there.
If sis or I pass away first, mom will need to change it all. If she is then incapable there will likely be an issue, unless the person with POA can fix it.
If sis or I pass away first, mom will need to change it all. If she is then incapable there will likely be an issue, unless the person with POA can fix it.