Titling or Setting up a Trust for Parents House to Pass to Us 3 Kids

[Malaysia41]

My parents are in their 80s. They have a house in Washington state that's valued by the local tax assessor at $700,000 (roughly $350k for land, $350k for improvements). This assessment is in the ballpark of realistic market value.

I have two siblings and we're all trustworthy kids. My parents want to title their house in such a way that it passes to the three of us 1/3 ownership each after they both die. They're comfortable transferring ownership to us prior to their deaths, or setting up a simple trust that passes it after they've both died.  It's already specified in their will that the three of us inherit the house 1/3 each. But I understand that will go through probate and may take a while and may incur some unnecessary costs.

It's been years since I've looked into this topic. So while I go back to the drawing board and do my research again, I thought I'd crowd source some wisdom here too. Any advice?

Thanks

[seattlecyclone]

A living trust for the house can be a fine idea. Either a living trust or having it pass to you through a will would allow you to avoid paying capital gains tax calculated from your parents' original purchase price, unlike if they simply give you the house while they are still alive. I don't know enough about probate in Washington to have a good sense for when setting up a trust to hold assets becomes a better idea than not.

[Malaysia41]

A living trust for the house can be a fine idea. Either a living trust or having it pass to you through a will would allow you to avoid paying capital gains tax calculated from your parents' original purchase price, unlike if they simply give you the house while they are still alive. I don't know enough about probate in Washington to have a good sense for when setting up a trust to hold assets becomes a better idea than not.

oh yeah - the basis steps up when we inherit. How could I have forgotten about that??? I guess it's simply because I haven't really thought about the subject in a long long time.

Yeah the more I've been looking into it the more a living trust seems ideal. That way they still have full legal control too. What if something happens and they need to sell? I'd like them to know they are still in control of their own assets.  Not that we'd offer any objections to their decisions, but well, why even make that a possibility?

[px4shooter]

What is the tax transfer fee in that state for property?

Does a trust or LLC alleviate the transfer tax?

I would look at a trust attorney in that state to see if a trust will avoid probate and a transfer tax. Where I am, the trust held real estate does not go through probate provided the distribution is designated in the trust.