Deed of Trust

Archive for July, 2008

Hard Loans

Question: Transferring home to a Trust - gift vs. $10 purchase?

My home was gifted to me by my parents. I am single with no children and want to transfer home to a Trust. The benificiaries of the trust will be my 12 nieces & nephews. I also want to transfer the home to my Trust to avoid some tax liens, collections that are going to happen shortly and I do not want liens/collections on the house. My question is, should I gift the home to the Trust or have the Trust purchase the home for $10?? I am the Trustee of the Trust. Also, once Quitclaim Deeded to Trust, none of my personal tax liens, etc. can be filed against home? I live in California.
If I don't gift the home to the Trust, but have the Trust purchase the home for $10 (it's my house, I can sell it for whatever amount I want - right?), then there would be no gift taxes.
And putting the home in a Trust isn't a sham, isn't that the smart thing to do?

Answer: Talk to a lawyer.

Your cost basis in the house is your parent's adjusted basis at the time they gave it to you plus any improvements since then.

If you try to set up an irrevocable trust, you have would incur gift tax in putting the house in to the trust if it's current fair market value is more than $13,000 per beneficiary...however, this also assumes you actually move out and rent the property to someone else. Otherwise the sham of the trust is pretty obvious and won't hold up in court.

Unpaid distributions to bucket company update Trust Deed?

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