Tax consequences of an agreement to convey property?

Mom doesn't have to be on the new deed. The rules vary from state to state, but it may be as simple as each son deeding his half to himself to break the JTWROS designation. Or the two quitclaiming to them both as tenants in common. Check with a local real estate lawyer to determine if that is available in your state.

To do that they should have a written agreement, including the legal description of the property, and have it notarized and recorded with the county recorder.

To me it sounds like a bargained-for exchange, and each sibling is both giving and getting roughly equal value, so there shouldn't be any gift tax consequences.

___ Stu

However, B's and S's remainder interest is in the form of a JTWROS -- so if, for example, B pre-deceases M, S becomes the sole remainderman.

B and S no longer want the remainder interest to be JTWROS. They both want their share of the remainder interest to remain in their family. In other words, if B pre-deceases M, both B and S want B's half of the remainder interest to go to B's heirs instead of S becoming the sole remainderman.

B and S's first thought was to simply get the deed changed, but some initial legal consulation indicated that could be a bad idea since it could restart the Medicaid lookback clock (since the property interests would apparently have to be reunified as a fee simple interest and then broken back apart into life estate and remainder interests, with remainder interests this time specified as a tenancy in common instead of a JTWROS).

B and S then thought of operating outside the deed by simply executing a contract between them, binding on heirs, that if either sibling (or either sibling's estate) got sole ownership of the properties on M's death, that sibling (or estate) would be required to deed over a half interest (as a tenancy in common) to the other sibling (or that sibling's heirs). In other words, if B died and then later M died, S upon receiving the sole interest in the property on M's death would have to deed a half interest to B's heirs.

The question: If they were to do this, are there any tax consequences of this? Is S's forced (by the contract) conveyance subject to gift tax? Or is the value of the conveyed half interest taxable income to B's heirs? ======================== I think that this is more of a legal question than a tax question.

I don't see how B & S have any right to change what has happened here. It seems that the rights are directed by M as trustee of the implied grantor trust protecting her life estate interest in the property.

Well, from a legal standpoing I don't see any gift here between the remaindermen, no matter how this is accomplished. Each starts and ends with essentially the same interest, though with slightly different rights.

If, as OP says, they are current owners of remainder interests, they have every right to do whatever they want with those interests. They can sell them, give them away or just change them. There is no necessity for the mother to have anything to do with it at this point.

___ Stu