My uncle wants to give his house to me. What is the best way for him to do this?

Nov 15

So, you have 5 options.

Option 1 is to do a will, but the problem with that is it will go through probate court and if any family members have an issue with it, they can try and contest the will.

Option 2 is deeding the property to you, but if you do that you’ll lose the step up basis, which would have potentially saved you hundreds of thousands of dollars from taxes.

Option 3 if a life estate deed, which is a better version than option 2, because under current law, you’ll still get a step up in basis, but the control of the property would be split between you and your uncle which could have implications down the road if he needs to sell or refinance the property down the road.

Option 4 is to do a basic revocable living trust, which still gives your uncle complete control over the property, but it would avoid probate and still get a stepped up basis. This option gives your uncle the most flexibility.

Option 5 is to do an irrevocable trust which is like a hybrid approach to option 3 and 4. With an irrevocable trust, the home would be protected if your uncle goes into a nursing home assuming he gets beyond the 5 year lookback, but the trustee still has the option to sell or substitute the home with another property for your uncle without causing income tax issues. Generally, most clients choose option 4, the basic revocable living trust because it gives the most flexibility with the least downside, but if your still unsure which option makes the most sense for your family, then give me a call and I’ll be happy to help!

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