Christopher Trueworthy retweetet
Whatever you do, do not let your parents transfer their house into your name.
Instead, do what the wealthy do.
If your parents are retiring and they tell you they want to sign the deed of the house over to you, maybe they bought the house for next to nothing back in the eighties and now it is worth $800,000, do not do it.
If they transfer it to you while they are alive, you will take their original tax basis. This means that when you eventually sell, you will have to pay capital gains tax on the entire increase in value since they bought it. The taxman does not care that it was a gift.
Here is what the wealthiest families do instead:
Step 1: Set up a revocable living trust and place the home inside it.
It keeps your parents in full control while they are alive, but sets up a smooth, private transfer later.
Step 2: Your parents should name you as the beneficiary of the trust. That way, when they pass away, the house automatically moves to you with no court involvement and no probate.
Step 3: When you inherit the house through the trust, you get a stepped-up basis. That means you only pay capital gains tax on any increase in value that occurs after they passed away, not on the huge appreciation since the 1980s.
That single move can save you over $120,000 in taxes.
That is how you pass inheritance to your children without losing a dollar to the system.
If you want to stop the government from taking a cut of your family’s hard-earned assets, follow these steps.
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