Foreign Real Estate Gift: (how) does Stepped-up Basis Apply?

[TomD8]

I agree with @Anonymous_.  The life tenant cannot sell the property without the consent of the remaindermen.  That's because the remaindermen have an ownership interest even while the life tenant is alive.  If the property is sold while the life tenant is alive, the remaindermen are entitled to a share of the proceeds.  The amount of both the life tenant and the remaindermen's shares is determined according to IRS actuarial tables.  

Since the life estate immediately terminates upon the death of the life tenant, it does not become part of the estate.  The property passes to the remaindermen automatically.  Hence, there is no need for probate.  This is one of the advantages of a life estate deed. 

There is no gift tax on transferring property through a life estate.

If the property is sold before the life tenant's death, the remaindermen do not receive a stepped-up cost basis.

If the property is sold after the life tenant's passing, the remaindermen do receive a stepped-up cost basis to the FMV on the date of the life tenant's passing.

[pk]

@toyaa0  having read through all the posts/ responses by my very erudite friends/ colleagues, viz. @TomD8 , @Anonymous_  ,  @Opus 17 @and @Mike9241 , whereas I agree with  all the comments but I read the whole situation a bit different  and question the applicability of US tax laws till some conditions are fulfilled.

1. As i read the  post  , especially since  right of use, right to revoke the gift ( under certain conditions ) and life-estate are retained by the donor --- this amounts to only a promise to gift rather than an actual gift/transfer of assets.

2. the donor , a non-US person, with assets  in a foreign land, establishes these  retained rights and promises under laws of Germany which cannot be contravened by US tax laws since  the donor nor the assets are under US jurisdiction. 

3. the right to use ( till death), to sell/ transfer, the  right to  revoke /Widerrufsrecht ( despite being conditional ) implies "transfer" with right  to claim back  -- all these  to me imply  a "promise " and not an actual transfer -- thus it is not a gift free and clear.

4. Therefore I am assuming it is a promise  ( as in a will -- I give by son ..... ) that only comes into  consumation on the death of and therefore extinction of the primacy rights of the donor.   So for US purposes  the estate comes into being at the death of the decedent and the promise becomes a reality.  At this point US laws of inheritance  applies to the beneficiary, not prior to that.

IMHO