Inheritance now or latter?

[Joe B.]

So I've got a unique situation. I am currently living on a 10acre piece of land it is owned by my parents. They are in the process of putting everything they own into a trust. The land I live on is going to be my inheritance. So the question my parents and I have is, should they give it to me know or would it be best for tax and legal purposes to wait? I'm interested in being able to leverage equity to start investing with. But is that a good move? We have a meeting with a CPA and lawyer next week. Thanks for your thoughts and input.

[Dan Mahoney]

@Joe B. You should listen to the advice of your CPA and lawyer.

With the caveat that I am neither, based on the limited information you provided, it may be better for you to inherit the property when one of your parents dies.  This is because your basis in the property will be "stepped up" to fair market value.  If they gift it to you now, their basis will carry over to you (and if they bought the property a long time go, their basis could be really low).  This only matters if you someday sell the property (because you may owe taxes on the "gain," i.e., sale price minus basis).  If you are going to own it until you die, your basis doesn't matter and you might as well have them gift it to you now.

If your parents are wealthy or the property is worth more than $5 million, then the trade-offs are more complicated due to estate tax and gift tax considerations.