Legal Question in Wills and Trusts in California

Re: Living Trust/Estate Question...

It would make more sense for your sister to make an arrangement with your mother regarding the house, since it is your mother's to give away.

The question you raise about potential appreciation in value is a good one - there isn't an easy answer to it, it's something you'd need to negotiate with your sister and her husband. The money will also "appreciate", too - whether or not the interest the money earns will match the growth rate for California real estate is a question a lot of people would like the answer to.

If your mother wants to do this, my suggestion would be to have your sister and her husband purchase what's called a "remainder interest" in the home from your mother - your mom would retain what's called a "life estate", and would have extra cash (received from your sister in exchange for the remainder interest) to leave to you instead of the interest in the house. By retaining a life estate, the home will get a step-up in basis at your mom's passing, which will provide a good income tax result for your sister. Your sister would also be able to keep your mother's low Proposition 13 property tax base year, which will save her a lot of money if she keeps the house.

The danger of that approach (or of any approach that tries to anticipate the future) is that things may change - your mother may need the funds (either as cash received for selling the remainder interest or as home equity) to fund medical care as she ages, or she may want to move to different housing at some point.

I would suggest that your mom sit down with a good estate planning/elder law attorney to think about what *she* wants - the kids will be OK, your mom's property should be used for her own care & comfort first.

Re: Living Trust/Estate Question...

your mom would need to agree to sell her home to her children now, rather than passing it at her death. this could have negative consequences for her, including possible capital gains tax. she should not consider this without consulting an attorney.

Re: Living Trust/Estate Question...

I am a little confused... You say your Mother is leaving you a house in her LIVING TRUST? If that is the case you most likely do not have any interest in the property until your Mother's death. Meaning that if the trust is truly revocable your Mother could change her mind and gift it all to someone else or a charity. Unless there is something different then what you described, you don't have anything for your Sister to buy out other then a potential interest in a house that you may or might not have. I would seriously recommend you not engage in any such dealings such as this until after the trust becomes irrevocable (i.e. at your Mother's passing). If for some reason you really need the money, I would definetly speak to an attorney before engaging in any such sales contract.