DEAR BOB: You said you were shocked when that attorney told his client she should prepare a quit claim deed and leave it with her will so her house would not go through probate when she dies. Your alternative suggestion was a revocable living trust. Where I live, we have real estate transfer-on-death deeds to a named beneficiary that avoids probate. Aren’t attorneys aware of these new laws? – Dorothy C.
DEAR DOROTHY: Although many states have laws allowing transfer-on-death designations for bank accounts, stocks, bonds and other personal property to avoid probate court costs and delays, few states allow transfer-on-death realty deeds.
Purchase Bob Bruss reports online.
There are pro and con reasons regarding real estate transfer-on-death deeds to avoid probate.
To illustrate, if you transfer your real estate to me in your will, but we later have a “falling out,” you can easily cut me out of your will. However, if you have a real estate transfer-on-death real estate deed, it’s a hassle to change it if I die before you do and you forget to change the transfer-on-death deed. For details, please consult a local real estate attorney.
DETERMINING COST BASIS FOR INHERITED PROPERTY CAN BE A HASSLE
DEAR BOB: How does the IRS figure capital gains tax for property when the seller doesn’t know the original purchase price? Along with a partner, my parents bought several acres of unimproved timberland in 1969. Then they bought out his half. Dad has passed away. Mom has no records of the original purchase price. She says in her state (Missouri) the purchase price is not recorded with the transfer of ownership. Are any adjustments made for inflation, as the gap between 1969 and 2005 dollars is huge? – Martin R.
DEAR MARTIN: If your mother decides to sell her timberland, she has a big tax problem determining her adjusted cost basis. However, it is possible to have a retrospective property appraisal made. The IRS has leeway to accept such estimates when the actual cost basis is not available.
However, if your mother dies while still owning the property, and you inherit it, your problem is solved. The reason is you will take title with a new “stepped-up basis” of market value on the date of your mother’s death. For full details, please consult your tax adviser.
DON’T SPEND MONEY BEFORE YOU HAVE A FIRM PURCHASE CONTRACT
DEAR BOB: My wife and I made a purchase offer to buy a house, which had been listed for sale at least two months. Our buyer’s agent told us the seller accepted our offer. We were very happy because we knew our offer was about $10,000 below recently similar home sales in the area. But about two weeks ago, after we spent money on a $400 home inspection, the seller accepted another offer, which was about $5,500 higher. It turned out our purchase contract was never accepted in writing, although the listing agent assured our buyer’s agent the offer had been accepted. Do we have any recourse other than getting our $5,000 deposit refunded? – Durel R.
DEAR DUREL: Your situation shows why it is so important to get everything involving real estate in writing so you have a legally enforceable contract.
I am shocked you waited two weeks and didn’t receive a written copy of the sales contract with the seller’s acceptance signature, but you went ahead and spent $400 on a professional home inspection.
At this point, all you can do is get your $5,000 good faith deposit refund and be satisfied you didn’t waste more than the $400 professional home inspection fee.
The new Robert Bruss special report, “The 10 Key Questions Condo Sellers Hope Buyers Don’t Ask,” is now available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet PDF delivery at www.bobbruss.com.
(For more information on Bob Bruss publications, visit his
Real Estate Center).
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