Grandparents home to buy... - Posted by Jason

import · December 14, 2005, 1:53pm

Posted by Frank Chin on December 18, 2005 at 12:07:42:

Natalie:

That’s why helping parents do estate planning is such a sensitive, and tricky matter.

She asked us to search for an attorney, which we introduced to her. And at all times, my wife updated her brother in sister just to be sure we’re not “up to something”. Streamlining her portfolio was something she said she wanted to do, and she initiated the process.

We once borrowed from her, and had her get an attorney, and we got our own. Finally, when we were going thru the estate issues, she thought that was a bit ridiculous, and we can all use one guy to seek advice.

I asked the attorney to give his frank opinion and he did. It was I that asked “why not keep everyhting in the will”?? The one BIGGIE I didn’t mention which he bought up was that mom in law was in “sound mind and body” at the time, and if the same move was attempted years later, now she’s in her eighties, when she’s not well, people would accuse her:

Her unsrupulous kids put her up to it.
She trying to hide assets from Social Security, Medicare etc.

In fact, another impetus for her was some dear friends of hers died destitute, because families and relatives were AFRAID to broach the subject, and everything was lost at the end. And it was all because to speak honestly would appear that you don’t have “her interest” at heart.

Fortunately, or unfortunately, her “estate” as of 15 years ago exceeded the $1,000,000 estate limit at the time which would subject the family to Federal estate taxes. So saving on capital gains was no biggie.

Then at the time, I worked a job where I’m in constant contact with attornies, and I mentioned what we’re doing to one of them . He mentioned that wealthy folks move out of NY state because many estates incrementlly reach some ridiculous taxation when one adds the top Federal rate of 55% at the time, to the high NY state rates. My mom in law said had no plans to move, to save on taxes.

Asked him why people didn’t do anything. His answer was if things were mentioned, it’ll seem that you’re not taking the “elderly’s” interest. So everything wound up being lost to estate taxes. SS etc.

I chose NOT to take the issue up with MY parents because of their attitudes.

Frank Chin

import · December 14, 2005, 1:53pm

Grandparents home to buy… - Posted by Jason

Posted by Jason on December 14, 2005 at 14:53:41:

My grandparents own a two family home that is rented out (to myself and one other). I am willing to buy and they will sell for below market value. What is the best way to proceed and is there any way to avoid getting croaked by Uncle Sam? Possibly a cash out refinance for them? Add me to deed and and remove them somehow. Any good recommendations are appreciated…

import · December 14, 2005, 4:22pm

Re: Grandparents home to buy… - Posted by dealmaker

Posted by dealmaker on December 14, 2005 at 17:22:49:

If they are elderly (not all grandparents are), buying is NOT the way to go on a ppty that is hugely appreciated. If is passes on death you will be eligible for “stepped up” basis. On the other hand, even if they are elderly they could live another 20 years. Biggest question is WHY do you want to buy? Also, why buy now?

dealmaker

import · December 15, 2005, 9:07am

Re: Grandparents home to buy… - Posted by Frank Chin

Posted by Frank Chin on December 15, 2005 at 10:07:00:

Dealmaker:

I would have an estate and tax attorney take a look, rather than look at generalities. You’re right abount the “stepped up” bases, but there are other issues.

We did some eatate planning for our mother in law, and we wound up having her doing some gifting. There were some capital gain consequences. Our attorney concluded it’ll be cleaner this way as she wanted to streamline her holdings. I asked my attorney what’s wrong with her giving it to us in the will, and save on capital gains?? His points were:

1- It’s nice for her to gift it now, rather than put it in the will and say “you’ll get this if you’re NICE to me”. DO you want her to control you the next 20 to 30 years??

2- With advances in science, often, people get incapacitated for years, nothing can be done for years unless preparations are made.

3- Things can change, and if my mother in law remarries, is she going to make things fair sharing things with her new family??

4- At the time we did the restructuring (15 years ago), we realize that the properties appreciated somewhat, but if it’s not done then, and 15 years later we decide to do it, it’ll be impossible due to capital gains considerations. Prices here have tripled from 15 years ago.

There were a number of other considerations as well that’s unique to our situation. But the point is an estate expert can better guide you.

Frank Chin

import · December 17, 2005, 4:59pm

Re: Grandparents home to buy… - Posted by Natalie-VA

Posted by Natalie-VA on December 17, 2005 at 17:59:55:

Frank,

With regard to #s 1 and 3, it sounds like the attorney was looking out for you and not the mother-in-law. I know I’m taking it out of context, but it struck me that way.

–Natalie