Form for Inheritance?

[JT2307]

Taxpayer is in the process of turning their home over to their son. Lawyer told them they need to fill out a form to show it is an inheritance not a gift. I am not sure what 'form' he is speaking of. Ideas? I have had many parents put their homes into their childrens names but I never had to fill anything out on my end. Was I missing something?

[Bees Knees]

There is no such thing as giving a home to a child and calling it an inheritance before mom and dad are dead. Any transfer at no cost to the child prior to the death of the parent is a gift. Period. End of story. The only way for the child to receive the home as part of an inheritance is to wait for mom and dad to die, then make the transfer.

You can, however, go to an attorney and have the child put on the title of the home as joint tenant with mom and dad. Then when mom and dad die, the home transfers to the child as an inheritance, assuming the child does not pay anything for his/her interest in the home. [IRC §1014(b)(9)]

[JT2307]

Just as I thought

Their lawyer told them there was a form for early inheritance. I think they need to find a new lawyer.

[BOB W]

How about a transfer of title to the son with giving rights to parents to live in the home for the rest of their life. This would be an incomplete gift. But would be an inheritance when both parents die.

[JT2307]

2nd home

Unfortunately they are not living in the house - the son will be living there - so I would say a gift tax return should be filed if any file needs to be.

[Roberts]

Taxpayer is in the process of turning their home over to their son. Lawyer told them they need to fill out a form to show it is an inheritance not a gift. I am not sure what 'form' he is speaking of. Ideas? I have had many parents put their homes into their childrens names but I never had to fill anything out on my end. Was I missing something?

I suspect he's talking about form 709.

[Burke]

I am thinking it is Form 706, gift tax return. He probably ought to contact his attorney for clarification.

[taxea]

Foolish move because son will not get the upgrade in basis if he gets the house now. Why don't they just let him live there until they die so he gets a FMV at time of death basis. Or do a quit claim to put him on the deed with them with a low % of ownership until they die. He doesn't want their current basis.

[Roland Slugg]

I am thinking it is Form 706, gift tax return.

No, F-706 is the Estate Tax Return. The Gift Tax Return is F-709.

Foolish move. ... He doesn't want their current basis.

How can you make such sweeping statements without knowing more facts? It may not be a foolish move at all. The parents may want to transfer ownership now in order to shift the costs and burdens of ownership over to the son, or for other personal reasons. It may not be a wise move for tax purposes ... and even that isn't necessarily true ... but to say it's a foolish move is nothing more than an opinion made without knowledge of all the facts and without knowing the motivation of the parties involved.

Regarding the basis, the parents basis may be high ... perhaps even higher than the property's current FMV. Taking over the parents' basis may not make much difference at all ... especially in the short run.

Finally, back the question posed in the OP, there is nothing in the federal tax laws regarding an "inheritance before death," and when I read the OP my initial thought was the same as JT2307's second post, "I think they need to find a new lawyer." But before doing that, I'd ask that lawyer what he was referring to. Maybe there is such a form in the state where the parents live and the property is located. Maybe it's called a "provisional inheritance" or something. FWIW, my guess is that by the time the discussion was relayed from the lawyer to the parents to JT2307 to this Board, that the lawyer's actual advice was lost along the way.

[TAXNJ]

Early

Unfortunately they are not living in the house - the son will be living there - so I would say a gift tax return should be filed if any file needs to be.

In some circles, an early Inheritance is called/referred to as a Gift. Inheritance/Estate is in play upon death.

As some reply posters recommend is to ask the attorney what tax form the attorney is suggesting for your answer.

[Lion]

Maybe a life-estate or whatever form that type of thing takes in his state...

[Burke]

No, F-706 is the Estate Tax Return. The Gift Tax Return is F-709.

You are right, and I can't understand why I can't keep those two numbers straight. In my mind, a gift comes before an inheritance, I guess.

[mastertaxguy]

form-house transfer-state property tax issue

Perhaps the original scenario was referred to a state property tax form, which might include some indication of how the son acquired the property.
In some states, transfers of ownership may cause an increase in property taxes, with some exceptions for things like transfers to a descendant or other such things.