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November 15, 2015


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Brian Frye

Related scenario: piercing the veil claim, client "explains" that they saved money by not hiring a lawyer to create the subs. Pennywise, pound foolish.


Would that kind of deed you suggest, where grandmother retained a life estate but gave away a remainder immediately get the step up in basis under 1014? Isn't it a present transfer and thus not a transfer at death?

Steve L.

Sorry if I wasn't clear. I meant that the grandmother could have gifted a life estate to the letter writer (not the reverse), and then left title in her will. So the house itself would be transferred as a bequest with a stepped up basis.

Will add an update in the post.

Kent Schenkel

If the grandmother continued to live in the house after it was transferred then he should still get the step-up.


If the grandmother was incompetent, the guardian could not have written a will for her. He might, however, be able to execute a deed for her. Another thought, did the grandson do this to help make the grandmother eligible for Medicaid? If so, she couldn't retain any interest in the property.

Kent Schenkel

Also Steve, even if grandmother had gifted a remainder interest to the letter writer and retained a life estate he would get the full step-up at death.


Thanks, Kent. It appears that there were several potential ways to effect the transfer without generating a huge capital gains bill, all of which could have been considered if the letter writer had been willing to pay a few hundred bucks for a competent lawyer.

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