Tobias wish to dispose of their life estates
prior to their deaths, their basis in the property will be determined under the general rule referred to above: they will measure gain or loss from the portion of their adjusted basis, calculated at the time of gifting.
If the Tobiases transfer their residence to their children with a retention of a life estate
in the property, they will have made a transfer subject to gift tax under the provisions of IRC section 2501.
This new law could offer a right of election for any surviving spouse with a homestead life estate
to trigger an optional buy-out.
Since the life estate
is to be valued actuarially (and in most cases, regardless of the surviving spouse's physical health at the time of the decedent's death), this strategy may be effective when the surviving spouse is not expected to live for the entire length of her life expectancy and the life expectancy is less than 10 years.
As might be expected based on the foregoing discussion of problems in valuing life estates
, valuation problems also are present in discretionary trusts.
Example 3: L inherits a life estate
valued at $300,000 from her great-aunt.
A life estate
retained by a grantor in a deed entitles the grantor to remain in possession of the subject real property until his or her death and gives the grantee (a/k/a remainderman) the grantor's remainder interest in the property.
A life estate
is defined as the total rights of use, occupancy, and control of a specified property limited to the lifetime of a designated party.
Gift of retained life estate
. Deed ownership of your personal residence, vacation home or farm to the IREM Foundation but retain occupancy.
The IRS has been given authority to issue regulations which may modify the generation-skipping rules when applied to trust equivalents, such as life estates
and remainders, estates for years, and insurance and annuity contracts.
It includes actuarial tables for valuing annuities, remainder interests and life estates
, and tables reflecting income tax and estate and gift tax rates.
given to the decedent by others in which the decedent has no further control or power at the date of death are not included.