KEYWEST_RICKS Posted March 25, 2012 Report Share Posted March 25, 2012 mom sells deeds the house to her son for $10 8 years ago and retains a life estate. mom passes in 2011 and son sells the house. this is a small estate and no gift tax return was filed 8 years ago and no estate tax is due now am i correct that due to the fact that mom retained a life estate the son still gets a step up in basis at the time of death in 2011? thanks so much jeff Quote Link to comment Share on other sites More sharing options...
OldJack Posted March 26, 2012 Report Share Posted March 26, 2012 The question must be did the son actually accept the gift and do things that an owner would do? If not there was no completed gift and son could claim step in basis on inheritance. The fact that she retained a life estate is not the point if son was not aware of the deed and life estate. Quote Link to comment Share on other sites More sharing options...
jainen Posted March 26, 2012 Report Share Posted March 26, 2012 >>if son was not aware of the deed<< Legally speaking, a recorded deed is constructive knowledge. But if Mom retained possession, using it as her home with the duties and benefits of ownership, it is still included in her taxable estate. So even if the total estate was less than the exclusion amount, it gets a stepped up basis. Quote Link to comment Share on other sites More sharing options...
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