Andrew L. Baron Featured in Newsday – Wills, Trusts, Sales: How Long Island Parents Pass Houses to Kids

There are many ways to hand down a house. From gifts to sales, irrevocable and revocable trusts – each with different benefits and drawbacks. Andrew L. Baron, Partner in the firm’s Trusts & Estates and Business & Real Estate Taxation practice groups spoke to Newsday to discuss why setting up a revocable trust might be the centerpiece of your estate plan.

Revocable trusts give parents complete control, which can have big financial implications as well. “People are setting up joint revocable trusts for houses,” said Andrew Baron. “We see it all the time.”

He said joint revocable trusts let parents retain control, because it’s still their property in their name. “We don’t usually see parents want to give up control, especially of the house they’re living in, while they’re still alive,” Baron added.

Revocable trusts don’t remove assets from the grantor’s resources to qualify for Medicaid, Rosas said. But there can be benefits. If a joint revocable trust is properly crafted with the two parents as beneficial owners, the trust can be structured to convert to an irrevocable trust and get a 100% basis step up on the first spouse’s death.

“If the second spouse wants to sell the home, they can do so without a capital-gains tax,” Baron said. Revocable trusts remain in estates, a downside for particularly pricey houses if estate tax is triggered.

“When you transfer a property to an irrevocable trust, you are using a portion of your $13.61 million exemption,” Baron said of particularly pricey houses. “You don’t have to pay estate tax on that property anymore, but you have less exemption to cover your other assets. If you are a New York resident, it’s not a part of your New York estate anymore as long as you survive three years from the transfer.”

Read the full article here.