Unfortunately, we expect my Mother to pass away shortly. At this time she is still conscious and aware of things. If my Mother transferred all of her assets to me and my siblings, could we avoid probate? (My Father is deceased).
ANSWER; Assuming you did transfer all of Mom’s assets and did not leave something in Mom’s name alone, it is possible you could avoid probate, but there would not be any tax savings. Anything transferred within 12 months of passing is considered a transfer in contemplation of death and 100% of the asset is taxed. If Mom transfers her house to you, you may find yourself in a disadvantageous tax situation because, unless an heir can claim that the house has been their primary residence for two of the previous five years, you will have to pay capital gains tax on the house. Further, you would have to take Mom’s basis in the house in calculating your gain. That means, you calculate your gain by taking what you sell the house for from what Mom paid for it. If Mom bought the house a long time ago that could be a considerable amount of money that you will pay tax on. If you take the house through Mom’s will, you value of the house as of the date of her passing, minus the expenses of sale, and you are taxed at the inheritance tax rate of 4.5% not the capital gains tax rate which is considerably higher.
You should have someone look over all of Mom’s assets to see how they are titled and compare tax rates to see if there would be any savings. It may be that you will save money at this point by simply taking through Mom’s will.