Estate planned but not for this
I live in Illinois, Brother in Arizona, Dad lives in Florida with property in Florida and Indiana.
Not sure if this is the right place for this Q or if someplace else is. But here we go.
My dad has been very proactive in planning his estate. He set up a trust, brother and I will co-inherit and we all regularly discuss all the accounts, amounts and what to do when he passes. The plan works for all, we’ve been aligned. Neither property holds any sentimental significance to my brother and I. We don’t live near either place and have no intention of visiting once dad passes.
Dad lives in FL in his 2nd wife’s home. His FL furnished condo is basic and only used by family when visiting him. IN property has all the antiques and personal ephemera that comes from living 80 years. He spends about 4 months in IN. It’s a large 3 story home with steep stairs and where all our effort will go when he passes. Dad dismissed suggestions to sell before but he was in good health.
None of us expected dad’s loss of mobility to make IN a dangerous place for him to be. Brother, 2nd wife and I don’t think he’ll be able to do another summer there. Dad can be stubborn and prideful but also can be reasoned with. He doesn’t want to be a burden but also doesn’t want to do the work of cleaning it all out. “Just take what you want and have an estate sale when I’m gone.”
Dad brushed off selling IN before but I think could be open to it at this point except for 2 blockers. 1. What he wanted us to take (me specifically since it’s the antique furniture.) 2. Capital gains tax from the sale if proceeds don’t go into another home.
I currently do not live in a place to fit the furniture. I’ve been house hunting and this is a factor in my search. But it’s a sellers market, won’t cool off anytime soon, and I’ve not found anything yet.
My questions: If dad sold IN could we (he and I) buy a place in IL together where I live? It’d still have to be financed which I would pay the mortgage and property taxes. How would that work from a federal and state income tax perspective for me, him and for the estate? His property is owned by the trust now. Would that be considered a gift that I’d get taxed on now? Does it not get taxed because the sale of one property went into the next? Can a trust and a person co-own a property? What percentage of ownership would be ideal and how does that get documented? Can that transfer to me with no issues after death? For fairness to my brother, I would of course subtract the amount contributed to the purchase from my half of the estate after dad passes. Is there anything else we should think of for fairness for my brother?
Any other ideas?
To be clear, if he wanted to just sell and give the money to others, that’d be fine with me. I’m not trying to get extra from the estate. I just know the antiques and mementos are what’s going to stop my dad from being willing to sell. I already rent one storage unit and couldn’t pay to move the stuff up and store it for years. So I’m trying to find a solution that will get him away from a home that he physically can’t manage anymore and could actually kill him (or worse, in his eyes, steals the quality of his life for his last years and would cause him to be a burden to everyone he loves).