suggestions?: Transfer house in mom's trust to three of four children and give the fourth a buy-out sum?

[2HOTinPHX]

sorry have not been back for a while. but yes. i got everything worked out. luckily my mom's lawyer who did here trust/will/etc. has gone though this situation before. the tricky thing is that the one sibling needed to be paid for his share of the house *by the trust* and then the trust transfers ownership to the remaining siblings. if the ownership was transferred to all the siblings and then the one sibling later gets paid for their share, that causes an additional ownership event that then renders the grandfather-ed property tax rate no longer in effect. hopefully i explained that clearly

so... to make that happen

-- the trust takes out a bridge loan & pays the one sibling their "share" of the house from that loan
-- the trust then transfers the ownership to the remaining 3 siblings in our case it's a 25/25/50 split with my brother getting 50 and living in the house and dealing with all the ongoing house costs.
-- my brother paying off the bridge loan

i know it's weird. and lawyer also knows it's "weird" but that's how the rules work. if i had planned ahead more. it would have probably been possible for me to avoid the bridge loan by arranging moms' retirement account distribution to leave more money for the house cash out sibling instead of a share of the house. but my sister previously also wanted to cash out, but then changed her mind (on her own) and so contortions where necessary. but it was well worth the work by the lawyer, because we'll make the lawyers fees back on tax savings in the first year.

Thanks for the update. Good to see you were able to work it out for all. This info may be useful to others in a similar situation.

 

[mh]

Thanks for the update. Good to see you were able to work it out for all. This info may be useful to others in a similar situation.

it's california specific. but perhaps it's applicable elsewhere. i would do it with a lawyer that's done it before it i think.

 

[mh]

Did the sibling that was bought out lose any benefit from step-up in basis?

the sibling got what was agreed upon as his share by all four of us. did he squeeze every dime out of his "share" ? possibly not, but... on the other hand he got lots of help from mom and dad over the years and, conversely didn't help out with mom in her later years at all where the other 3 of us did quite a bit. he knows full well he came out way ahead on the deal , so there's not an issue there.

 

[RunningBum]

What a nice story of 4 siblings working together to honor their mother's wishes about the brother and come up with an acceptable solution to all. No bickering from the other siblings that they didn't get all they "deserve", or anything like that.