complicated family property - Posted by Corinne

Posted by Jimmy on January 07, 2007 at 07:19:20:

This is an estate planning problem. Identify an estate planner in your area. Do not bother going to a living trust attorney. Find a tax attorney who specializes in larger case work. There is a huge body of EP strategies which most LT guys do not understand.

by the way, the use of a family limited partnership or FLLC would NOT necessarily trip a reassessment under Prop 13. if the entity is (initially) controlled 100% by your mom, there is no change in ownership. I did these transactions many times in Contra Costa, San Mateo, Santa Clara, San Francisco and Marin Counties. Only Alameda treated this as a CIO. and the law was changed a few years back, which made Alameda come into compliance with everyone else. Once you mom had relinquished control, you will have a CIO.

one little hazard. you are dancing a fine line between the estate tax and the income tax. a successful FLP will avoid/reduce the estate tax exposure, but it also kills the “step-up in basis at death” for the underlying real estate. whatever partnership interests you inherit will be stepped up. and you can make a 743 election which (sort of) remediates he problem. you will definitely need a good accountant who completely understands these rules ot guide you.

complicated family property - Posted by Corinne

Posted by Corinne on January 06, 2007 at 17:08:05:

Hi,
My brother, my sister and me built our homes on my mom’s 23 acre property in
California. She acknowledges that the homes are ours, free and clear, and has
expressed this in her Trust Agreement. We continue to pay her rent for the land
(we have a family cattle business) but she will give it to us upon her death as
indicated in her trust agreement. Since the property has increased in value, it
will surpass the maximum allowable inheritance/gift credit. We might end up
losing our home because we won’t be able to pay taxes. We would like to place
title for the homes in our names now to remove them from her estate. Is this
possible? We cannot develop a family partnership or LLC because we will lose
our Prop 13 benefits. We do not have the money to split the lot and if she put
us on the deed now, it would generate a large gift consequence. What do you
suggest? Thank you!