@hntrust wrote:
I'm thinking that the JTWROS deed was used to avoid probate when the mother dies. The deed was created by the attorney who probated the grandfather's estate in 2017. I think that the son needs to go back to the attorney and ask if a life estate was the intent and if so how does the son prove that if he were to get audited by the IRS for failure to pay the capital gains tax sometime in the future after mom died and he sells the house.
While JTWROS does avoid probate, it may not be the best tax strategy. If you have a JTWROS in writing, that would seem to completely rule out a life estate, implied or otherwise. One of the difference, if I understand correctly, is that with a life estate, the "remainderman" has an ownership interest but has no real limited rights until after the owner dies (the remainderman can't sell their interest to someone else, for example). With JTWROS, either party has the right to sell their share to a third party without the permission of the other--for example if your son-in-law wanted to cash out of the house now, he could sell his half to an investor would would then be the new co-owner with his mother.
I would go back to the lawyer, or go to a different lawyer, and present the whole problem. Not just "how do I give my house to my son without probate," but "how can I best protect my assets so my son inherits as much as possible with as little legal trouble as possible, with minimum tax consequences, including planning for some way to protect my son's inheritance if I require long term medical care or have other unexpected life events."
