Thanks, Ray. Quick question. My 83 year old father-in-law owns his home in Anaheim (he’s the only one on title). My wife is an only child. What is the best way to “protect against (future) probate” (tax-wise)? Have him create a Living Trust? Just add my wife to title as Joint Tenants? Do you have a recommendation? Thanks…(

It is sort of a legal question more than a tax question, so I will start out with saying I am not giving you legal advice.  My clients ask me questions that seem to be legal all the time so I will tell you what I know, but not give you advice or tell you what you should do.

If it were my father-in-law I would take him down to an attorney and get him a trust.  In fact, I think I have a friend on LI that has done some work for my clients in OC I can forward you.  A couple reasons I would want a trust.  A tax reason is when he passes you will get a step up in basis on property that is inherited.  If you put your wife on title and if your father-in-law had a big enough estate (which doesn’t seem like it from your email) the IRS would say you inherited when you filed an estate tax return.  However on your side they would, if the question came up the IRS, say you received the property as a gift and were not entitled to the “step-up” so when you sold the property you would have a gain and pay tax.  A trust makes it cleaner.

I believe there are some liability issues too.  I am in over my head this morning as far as explaining those to you but I do recall a few times in the past where an attorney was hesitant to add additional owners on a property because of liability.  Also, had a client one time years ago that filled out quit claim deeds and gave them to their kids.  One kid pre-deceased the parents.  The parents intended to give the daughter-in-law her share when they passed but she didn’t want to wait.  The daughter-in-law squandered a big part of her inheritance on attorney fees to get her share early.  Parents spent a lot more.  Doesn’t sound like an issue for you.  I bring it up because I have found it is the stuff you don’t know that kills you.  A trust is good protection against that.

This blog is a collection of questions from clients and the answers.  The goal of the blog is not to answer the questions you might have.  Most times the answers are based on each client’s personal situation.  Please do not rely on this information to make important financial and tax decisions.  The advice presented here is presented to give examples of the type of information you get as a client of a true tax professional, like Ray Simmons and the preparers he employs.  Advice regarding similar issues for you should be based on your personal situation. 


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About taxdude8422

Basically I am just a tax nerd, have been all my life. However I have found the more open you are to opportunities the better off you will be in this world. That makes my what is know as an open networker on Linkedin, I will connect with anyone. I am not an expert on Linkedin by any means but one day when I was asking someone to connect I mentioned that I had just been refilled on invites. My new connect asked how I did that. I used that same line for the next month and got asked the same question four times. I started thinking there was a lot of little things it took my sometime to learn. Through this blog I plan to share some of those "Linked Secrets"
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