Living trust is an easy way to formalize a parent's wishes

Q. My mom has owned her home for more than 40 years. She is 85 years old and her home is basically her only asset. She wants her home to go to her three children when she dies. What is the easiest and cheapest way to set it up so her house goes to the three of us when she dies? If we ask her to, she will deed the property to us now. Should we do this?

A. Do not convey the property now. You will lose the tax benefit of obtaining a "stepped up basis" of the property. This means that upon your mother's death, the new tax basis of the property is the date of death value rather than the original purchase price of the property. If the property is sold for at or near that stepped up amount, little or no tax will be due.

An easy and probably the most common form of effectuating the transfer of the property would be through a living trust. Mom creates a trust and conveys the property into the trust. Mom is the trustee and a successor trustee is named in the event of mom's death. Upon mom's death, the successor trustee holds title to the property as trustee of the trust and has all the powers delineated in the trust, which would include selling the property and disbursing the funds per the provisions of the trust.

There may be other more appropriate actions to take based upon your family situation, including, but not limited to, mom's health. I would strongly suggest consulting your tax adviser before making any decisions.

Q. Our house was listed for sale and we had an offer within the first week. It was very low and we decided not to respond to the offer.

We have never heard anything further from that buyer. It is about six weeks later and we would now like to accept that offer. Can we do this? Would this be an enforceable contract?

A. As a general rule, an offer is live until it is accepted, rejected or revoked. You indicate that nothing has occurred between the parties since the offer was made. Accordingly, it would appear you have a live offer which can be accepted by you, creating a binding contract.

There are two issues to consider, though. One, some form contracts contain a provision similar to: This contract is void if not accepted within ____ hours/days. If this provision is contained in the contract and the blank is filled in, the offer would terminate upon the designated period of time.

The other issue to consider is even in the event you could drag the buyer back to the deal against his or her will, numerous contingencies still remain, including the attorney review, home inspection and financing contingencies. Any competent attorney will find a way to extricate his client from the contract.

My suggestion would be to contact the buyer or selling agent if the buyer was represented and indicate you are now receptive to the offer or you wish to counteroffer. If the buyer has not committed to another property, perhaps he or she will reconsider yours. Your only chance of contractually binding this buyer is if this buyer wishes to be bound.

• Send your questions to attorney Tom Resnick, 345 N. Quentin Road, Palatine IL 60067, by e-mail to tdr100@hotmail.com or call (847) 359-8983.