[jackrick]

My dad is 91 years old and his house is paid off. I live with him with my husband, should a quit claim deed be drawn up, or should we let the property go through probate. What would happen to the property when he dies and we are living in the house? We live in Michigan. Thanks.

[ballengerb1]

Are there any other family members other than you and your husband who would stand to inherit?

[ebaines]

The main advantage to you in inheriting the house rather than receiving it as a gift is that your cost basis in the property will be automatically "stepped up" to the fair market value as of the date of his death. This is different (and better for you) than what happens if you receive the property as a gift. The tax cost basis for property received as a gift is usually equal to the gifter's own tax cost basis, which is equal to his original purchase price of the property plus any costs of capital improvements he may have made over the years. Assuming that he has owned the property for more than a few years, the difference in terms of potential tax savings for you when it comes time for you to sell the property may be substantial.

Also, if he gifts the property to you he will have to file a gift tax form with his income taxes. In all likelihood no actual taxes would be due, so it's more of a paper pushing hassle than anything. But still something to keep in mind.

[AtlantaTaxExpert]

The issue here is the gift/estate taxes and the amount if the Unifoed Credit (which dictates how much of the estate is exempt from gift/estate taxes.

To answer correctly, we need to know the SIZE of his entire estate.