sale of life estate property

[DMICPA]

Bob W.

The deceased husband was the owner of the property and the title was changed upon his death to the ten children with the life estate to the spouse. Since the husband was the owner, when he passed away, the property was appraised at his date of death. Since the wife was not an owner, her death had no effect on the basis. Actually, the way this particular document was written, the spouse could not sell or borrow on the property as each of the children would have to sign on the documents.

Incidentally, the 1099-S was issued to each of the ten children indicating their share only.

[BOB W]

The deceased husband was the owner of the property and the title was changed upon his death to the ten children with the life estate to the spouse. Since the husband was the owner, when he passed away, the property was appraised at his date of death. Since the wife was not an owner, her death had no effect on the basis. Actually, the way this particular document was written, the spouse could not sell or borrow on the property as each of the children would have to sign on the documents.

Incidentally, the 1099-S was issued to each of the ten children indicating their share only.

That all makes sense........thanks........

[BOB W]

If I may expand on this thread............. I have heard that creating a Life Estate CAN cause a gift tax return at the time of creation of the Life Estate.. I never understood why because of the "incomplete" nature of the transfer.

Is it because of the value received or what? To me it is $0.......................

[Gary2]

If I may expand on this thread............. I have heard that creating a Life Estate CAN cause a gift tax return at the time of creation of the Life Estate.. I never understood why because of the "incomplete" nature of the transfer.

Is it because of the value received or what? To me it is $0.......................

It's generally not an incomplete gift. It's a complete gift of a future interest.

Take a look at this article, which describes various Florida options, including the difference between the traditional life estate (complete gift) and enhanced life estate (incomplete, because there's a power to revoke).

[BOB W]

It's generally not an incomplete gift. It's a complete gift of a future interest.

Take a look at this article, which describes various Florida options, including the difference between the traditional life estate (complete gift) and enhanced life estate (incomplete, because there's a power to revoke).

WOW.........!!!!!!!! OK.... I will have to review the calculation method for "Gifts of Future Interest". Thanks for the clairification.

The article says a gift tax return "May or May not" be required for Traditional Life Estate. Is that because the value of the calculated gift may fall below gifting threshholds or what?

ADDED: I did a quick research and could not find where any discount off of FMV of the gift is calculated. There has to be a discount calulation because it is a gift of future interest with NO current value other than a right of possession down the road.

ADDED AGAIN: I found an IRS explanation for doing the calculation:

http://www.irs.gov/pub/irs-pdf/p1457.pdf