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Old 08-11-2014, 02:54 PM
 
Location: Florida -
8,767 posts, read 10,864,802 times
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People who have actually done it have told me that they formed a corporation for a family business and a personal estate ... and annually issue a prescribed number of 'shares' to their heirs until ownership has been transferred (They retain a controlling 'share'). The overall value is determined by an appraisal at the time the 'Corporation' is formed.

I'm guessing that if the heirs later decide to sell the property, they will be required to pay taxes on a new, stepped-up basis. Does this make sense, or am I missing something (such as estate size or tax implications)?
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Old 08-11-2014, 03:24 PM
 
Location: Near a river
16,042 posts, read 19,001,270 times
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Many states have a LadyBird deed, named after Lady Bird Johnson. You can google it. It's an alternative to a trust, just for the owned home.
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Old 08-11-2014, 07:16 PM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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Very state dependent. I use a living trust and llc's . the STEPUP basis of the trust is handy for taxes.

Up to allowable limits.
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Old 08-12-2014, 06:24 AM
 
Location: Houston/Brenham
4,121 posts, read 4,709,249 times
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Quote:
Originally Posted by jghorton View Post
People who have actually done it have told me that they formed a corporation for a family business and a personal estate ... and annually issue a prescribed number of 'shares' to their heirs until ownership has been transferred (They retain a controlling 'share'). The overall value is determined by an appraisal at the time the 'Corporation' is formed.

I'm guessing that if the heirs later decide to sell the property, they will be required to pay taxes on a new, stepped-up basis. Does this make sense, or am I missing something (such as estate size or tax implications)?
This is a very common tactic among people with large estates. It's called a Family Limited Partnership (FLP). You have described it fairly well.

It only makes sense if your estate is over the tax limit. Or will be. It costs several thousand dollars a year to maintain properly, and have annual appraisals. So for a <$5 million estate, probably not worth it. Over that and it can make sense.

I am familiar with these, ask if you have any questions. Just remember, IANAL.
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Old 08-12-2014, 07:20 AM
 
Location: Florida -
8,767 posts, read 10,864,802 times
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Quote:
Originally Posted by astrohip View Post
This is a very common tactic among people with large estates. It's called a Family Limited Partnership (FLP). You have described it fairly well.

It only makes sense if your estate is over the tax limit. Or will be. It costs several thousand dollars a year to maintain properly, and have annual appraisals. So for a <$5 million estate, probably not worth it. Over that and it can make sense.

I am familiar with these, ask if you have any questions. Just remember, IANAL.
Thanks; I figured there must be some common name for this. 'Sadly', we are not quite in the $5M+ estate category. Are there cases where it still makes sense to transfer property this way? (Annual appraisals?)
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Old 08-12-2014, 07:23 AM
 
Location: Florida -
8,767 posts, read 10,864,802 times
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Quote:
Originally Posted by StealthRabbit View Post
Very state dependent. I use a living trust and llc's . the STEPUP basis of the trust is handy for taxes.

Up to allowable limits.
We've also used living trusts, durable POA, and other similar vehicles. Overall, I believe the tax picture is only going to get worse and, like many, I'm looking for legal ways to avoid as much 'double taxation' as possible. -- "Gifting", for example, seems like a good strategy.
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Old 08-12-2014, 07:30 AM
 
Location: Florida -
8,767 posts, read 10,864,802 times
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Quote:
Originally Posted by newenglandgirl View Post
Many states have a LadyBird deed, named after Lady Bird Johnson. You can google it. It's an alternative to a trust, just for the owned home.
Thanks. That looks like a very interesting alternative to a life trust, in that it seems to allow the owner to retain control of the property during their lifetime (vs a quitclaim deed)

Florida Lady Bird Deed | Enhanced Life Estate Deed in Florida | Florida Probate Solutions
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Old 08-12-2014, 07:56 AM
 
Location: Florida
4,379 posts, read 3,716,488 times
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This can help but got to a CPA that has EXPERIENCE in this area. Be sure to understand the day to day accounting and tax requirements.
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Old 08-12-2014, 11:41 AM
 
59 posts, read 66,380 times
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Originally Posted by rjm1cc View Post
This can help but got to a CPA that has EXPERIENCE in this area. Be sure to understand the day to day accounting and tax requirements.

Good advice !!!!!!!!!!
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Old 08-12-2014, 04:55 PM
 
Location: SW Florida
9,773 posts, read 7,057,711 times
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Quote:
Originally Posted by jghorton View Post
Thanks. That looks like a very interesting alternative to a life trust, in that it seems to allow the owner to retain control of the property during their lifetime (vs a quitclaim deed)

Florida Lady Bird Deed | Enhanced Life Estate Deed in Florida | Florida Probate Solutions
The Lady Bird Deed is actually a property quitclaim deed, made out for the heir, but it doesn't go into effect until the last owner dies. It's legal in Florida and we set up one of these deeds on our retirement house/property for our daughter, so that the ownership of the house automatically goes to her when the last one of us ( either myself or my husband) die. The attorney that helped us write our will suggested that we do this if we wanted to leave our daughter the house, as it won't have to go through probate this way.

We don't have a mortgage on this house, so it wasn't an issue for us, but I'd wonder if there were a mortgage on a property, how that would play into the writing up and carrying out of a Lady Bird deed. Because I know that mortgage lenders consider the terms of a mortgage null and void if the owners whose names are listed on the mortgage change. Unless, of course, they approve of a new owner assuming an old mortgage- I haven't seen that for years!
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