Death tax vs. Gift Tax

[dev]

Hi everyone...first time post and have a question:

I am named in my elderly mother’s living trust as the inheritor of some commercial real estate located in the Los Angeles area (multi unit rentals). Her name is currently on the note and deed of trust. Her health is worsening and as the executor of the trust, I must make some tough decisions regarding how to deal with the property.

When the inevitable day of her passing arrives, the lender will call the note due (1.2M) which will force me to refinance since I plan to retain the property. The total value of her estate is roughly $3M (equity in the commercial property plus a house and savings).

Would it be smarter to:

1. Refinance now while interest rates are low and add my name to the deed and new note to avoid possibility of incurring higher estate taxes that may result with expiration of the Bush tax cuts. At the time of her passing, I believe the note would remain intact as survivor of joint tenancy. Would this approach trigger an immediate gift tax that could impact either of our tax liabilities?

2.Do nothing and take a chance that the estate taxes will be so high it could force the sale of the property as part of the trust settlement?

thanks...

 

[kirby]

I am really confused here. You said the living trust names you as the inheritor of the real estate. So then if the trust is in force it would "survive" your mom. That could happen if the trust is the owner of the the property - but in the next sentence it is not. Your mom is on the deed not the trust. So I think a) you have a LOT of money at stake here (clearly) and b) you need to spend $$$ on a good lawyer (not a web forum) to guide you thru this ASAP while she is still alive and can modify this.
Bottom line - it is SMARTER to get some qualified help on this NOW