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MrMEJackson writes:

My mother has asked me to make arrangements to have all of her property, (home and several acres of farm land) transferred to me. My attorney says it would be wise for her to convey the property to me. She would be living there for the rest of her life of course. I suppose my question is... Are there some tax consequences for me in such a conveyance of property?

I reply

Congratulations on looking before you leapt! You'd be amazed at how many similar questions we get in the context of "Last year my mother transferred to me . . . ."

I see at least three concerns here. First, as has already been pointed out, if you receive the property via gift, rather than inheritance, you will get only your mother's basis in the property. Thus, when you eventually sell it, you will pay more in capital gains taxes. Moreover, because you will also receive your mother's holding period, you will not be eligible for the ultra-long term 18% capital gains rate.

Second, your mother might be triggering gift tax issues for herself. Even if you are married, and assuming that your mother no longer is, she can give you and your spouse only $22,000 before starting to use up her lifetime unified gift-estate tax exclusion. Depending on the size of her estate, this may or may not be a problem, but at a minimum your mother should be aware of the possibility.

Third, at least on this Board, the most common reason for the parent of an adult child to transfer "all of her property" is to establish Medicaid eligibility without spending down the estate. This is a very thorny legal area and it is all too easy to commit a crime while trying to advance this otherwise laudable goal. If that's what's going on, I urge you to consult an attorney who specializes in elder law. --Bob
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