Is a living trust better than a will? Specifically in regards to protecting Mom's house from taxation upon her death? - AgingCare.com

Is a living trust better than a will? Specifically in regards to protecting Mom's house from taxation upon her death?

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No mortgage. I live there and provide P/T care, it was always my Mom and step-Dad's intent that my daughter and I would keep the house when they were gone. I'd anticipate issues with siblings & step-siblings but am more concerned with taxation issues.

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Gerry, are you concerned about estate or inheritance taxes on the house? If so, and if you're parents are in a wealthy class, with a high value house, the question of will vs. trust is one that should be addressed, by an estate planning attorney, or elder law attorney. I prefer the former; their knowledge is broader since they cover estate planning issues for any age.


This article may help distinguish the two, although I confess having read it several times and am still confused. (If the http: and www. prefixes are truncated by filters on the site, just add them back when you plug the URL into the address bar on your webpage.

thebalance.com/state-inheritance-tax-chart-3505460

This article and chart provide info on which states have inheritance or estate taxes:

taxfoundation.org/state-estate-tax-inheritance-tax-2018/

But you also need to consider step-up values, which occur on death. I don't recall all the issues so I won't offer any opinions other than that values can be "stepped up" to current value on date of death. I'm addressing that issue right now with mutual funds.

Some ancillary issues apply: do your parents have either a Will or Living Trust now? If so, was a deed prepared to "fund" the Trust with the house, and probably other assets? If not, in whose name is the house titled?
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Gerry, if only we had a crystal ball to see the future. One never knows when one's parent might need a higher level of care, and funds would be needed to pay for such care. Thus equity from the house. I see that you are caring for your Mom who has Alzheimer's / Dementia. How is she doing?

One's parents always want their child(ren) to inherit the house. With our parents living much longer [mine were in their mid-to-late 90's] they usually run out of funds for their care.

Once my Mom passed, then my Dad needed around the clock caregivers which cost him $20k per month. Dad decided to sell his house and move into senior living which was $5k per month so the equity from the house was a great relief.

So, getting the house would be nice, but realize that may not be the case. As for a Living Trust vs a Will, check with an "Elder Law Attorney" to see what is their recommendation.
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