Should I create a trust or will to leave my house to my cousin? 7 Answers as of April 15, 2011

My house is paid off, when I die, I would like to leave my house to my cousin. Is it better to put it in a Trust or Will to eliminate the tax implications if she sells it?

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Law Offices of Brian Chew
Law Offices of Brian Chew | Brian Chew
If you would like your cousin to inherit your home if you pass on, you should have a living trust created and place your home within the trust so that your cousin can avoid the high costs and delays of probate. Also be inheriting your property, your cousin will be given a stepped up basis in your property and thus receive the most favorable tax treatment.
Answer Applies to: California
Replied: 4/15/2011
Harris Law Firm, pc
Harris Law Firm, pc | Robert Harris
There is very little likelihood of having any tax implications on an inheritance. In fact, its better to inherit property in many cases because the beneficiary gets to avoid potential capital gains taxes in the future. A simple will is probably all you need. But you could do a trust and avoid a probate when you pass away. But, a simple will would cost about $500 and you can do it and forget about it. And a trust will be about $1750, and will take some maintenance over the years. However, the trust will avoid a probate after you die, and the probate can be $2,500 to $3,500 or so. BUT, of course you don't pay for the probate. So the question is whether you want to pay out of your pocket more now so that the person who inherits your property can avoid a probate. Or whether you just want to do a will and forget about it and let them deal with it themselves later.
Answer Applies to: Oregon
Replied: 4/13/2011
Burnham & Associates
Burnham & Associates | Stephanie K. Burnham
There are two considerations in determining whether or not you should consider a Will or a Trust in passing your assets to your beneficiaries. First, do you want your beneficiaries to go through Probate Court to receive their inheritance when you pass away? If the answer is "Yes" then a Will should be prepared, if the answer is "No" you should consider a Trust. Second, do you want your beneficiaries to have to follow some personal rules, like they have to be older than 25 or they should only receive part right away and the rest after they turn 40 years old, before they inherit? If the answer is "Yes" you should consider a Trust, if the answer is "No" a Will may be sufficient. With either vehicle your cousin will likely get a step-up in basis, minimizing the taxes that they would pay. As for whether or not there are inheritance taxes for your cousin to pay - that question is state specific.
Answer Applies to: New Hampshire
Replied: 4/13/2011
Theodore W. Robinson, P.C.
Theodore W. Robinson, P.C. | Theodore W. Robinson
Its actually better to leave it in a Trust so it passes outside of any estate proceedings and has no tax consequences initally. I don't believe there are any tax consequences when she sells it either, but more research would have to be done on that nuance since those rules and laws change quite a bit from year to year. Or perhaps speak to your accountant first. Good luck.
Answer Applies to: New York
Replied: 4/12/2011
Law Office of Richard B. Kell
Law Office of Richard B. Kell | Richard B. Kell
Whether estate taxes will be owed upon your death, and whether capital gains taxes will be owed from a future sale, will largely depend on the value of your estate at the time of your death.

For estates under $1 million (sometimes $2), no estate taxes would be owed under the current state and federal exemption amounts. And the only capital gains taxes that would be owed from a future sale would be assessed on the gains (if any) accrued from the date of your death to the date of the sale. However, for larger estates, different rules would apply.

My advice would be for you to sit down with an estate planning attorney to figure out the best way to preserve your estate.
Answer Applies to: Massachusetts
Replied: 4/12/2011
    Apple Law Firm PLLC
    Apple Law Firm PLLC | David Goldman
    There is actually a third option you may consider. It is the enhanced life estate deed. Of the will or trust, the trust is typically a better choice but it also could be subject to creditor's claims unless you maintain the home as you homestead. The enhanced life estate deed would do the same as a trust but potentially it would not subject the property to creditors claims.
    Answer Applies to: Florida
    Replied: 4/12/2011
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