Purchasing a home from a relatives life estate

[Travis Morgan]

Looking for some advise on the best way to approach the purchase of my grandfather's home (still going strong at 95!). The house is currently in his life estate that my mother is the sole beneficiary on. This has been in place for some time. The home is valued at $300K but I have worked out a verbal deal with my mother\grandfather to buy the house for $230K. The house was purchased originally back in the 60's for $20K. Trying to limit my mother, grandfather or I (future sale) from getting clobbered by capital gain tax. I understand from my research the most beneficial would be for me to inherit the house from the estate after his passing however with all hope that isn't happening anytime soon and we need to make this ownership transfer in the near term. The second option I was thinking about was seller financing. I could buy the house for $300K from the estate, my parents could gift my wife and I back the $70k over 2 years (max $56k per year), down payment of $80k, finance from the estate the remaining $150k. My future cap gain hit would be limited as Im buying at market value. how would this affect the life estate? should we leave it in the estate or take it out before doing this? I'm new at this stuff. Only know the little i've been reading. How off am I? Thanks