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turfing inheritance to children who will pay less capital gains tax? kalanamak 12-09-2007
Posted by kalanamak on December 9, 2007, 2:41 am
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 Is there an IRS-accepted way to have money obtained from a sale of
property left in a will go directly to the granddaughters of the
(now-deceased) land owner. His will left a share to his son, who wants
it to go to his grown daughters, who are in a lower tax bracket.

Sister of son is buying out his share and putting the property in her
name. We don't want to disclaim his share, as it will then be split with
all the son's kids (not just grown daughters), and we don't trust sister
to pay up without a scuffle, and we don't want to turf that burden onto
the granddaughters.

What about a contract for deed, where an escrow agent holds a quit claim
deed from the son to his sister, but the agent mails the money directly
to the granddaughters?


Posted by joetaxpayer on December 9, 2007, 2:56 am
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 kalanamak wrote:

> Is there an IRS-accepted way to have money obtained from a sale of
> property left in a will go directly to the granddaughters of the
> (now-deceased) land owner. His will left a share to his son, who wants
> it to go to his grown daughters, who are in a lower tax bracket.
>
> Sister of son is buying out his share and putting the property in her
> name. We don't want to disclaim his share, as it will then be split with
> all the son's kids (not just grown daughters), and we don't trust sister
> to pay up without a scuffle, and we don't want to turf that burden onto
> the granddaughters.
>
> What about a contract for deed, where an escrow agent holds a quit claim
> deed from the son to his sister, but the agent mails the money directly
> to the granddaughters?

The son can gift his children $12,000/yr with no gift tax consequence,
or, he can use up part of his $1M lifetime unified credit. If he's
married, the $12K doubles to $24K.

The transaction is a gift the way you describe it.
JOE


Posted by Phil Marti on December 9, 2007, 7:20 am
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> Is there an IRS-accepted way to have money obtained from a sale of
> property left in a will go directly to the granddaughters of the
> (now-deceased) land owner. His will left a share to his son, who wants it
> to go to his grown daughters, who are in a lower tax bracket.

The basic answer is "no," but I'm having trouble seeing the problem, either
with getting the money where he wants it or making sure Sisterwoman doesn't
stiff him (from the unquoted part).

Why is there concern about tax brackets? This is an inheritance, which is
not taxable income. Why is there concern about the sister's actions? Isn't
there an executor?

A little clearer explanation of the situation, including some dates might
help.
--
Phil Marti
Clarksburg, MD


Posted by kalanamak on December 9, 2007, 11:46 am
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Phil Marti wrote:
>
>> Is there an IRS-accepted way to have money obtained from a sale of
>> property left in a will go directly to the granddaughters of the
>> (now-deceased) land owner. His will left a share to his son, who wants it
>> to go to his grown daughters, who are in a lower tax bracket.
>
> The basic answer is "no," but I'm having trouble seeing the problem, either
> with getting the money where he wants it or making sure Sisterwoman doesn't
> stiff him (from the unquoted part).
>
> Why is there concern about tax brackets? This is an inheritance, which is
> not taxable income. Why is there concern about the sister's actions? Isn't
> there an executor?
>
> A little clearer explanation of the situation, including some dates might
> help.

Property owner died 9 years ago, but property still in his name.
Property has doubled in value. 50% of what is coming will have capital
gains.

Executor is sister, who has broken more than one state law about her
role as such. Some families are unwilling to go after a family member in
court. Sister now wants property all in her name (assessed value is
going up 24% for 2008) and wants to write IOUs (interest-free) for "five
to ten years down the line". We want our money now. The posturing has begun.

I file this under "inlaws".


Posted by Harlan Lunsford on December 9, 2007, 12:22 pm
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kalanamak wrote:
> Phil Marti wrote:
>>
>>> Is there an IRS-accepted way to have money obtained from a sale of
>>> property left in a will go directly to the granddaughters of the
>>> (now-deceased) land owner. His will left a share to his son, who
>>> wants it to go to his grown daughters, who are in a lower tax bracket.
>>
>> The basic answer is "no," but I'm having trouble seeing the problem,
>> either with getting the money where he wants it or making sure
>> Sisterwoman doesn't stiff him (from the unquoted part).
>>
>> Why is there concern about tax brackets? This is an inheritance,
>> which is not taxable income. Why is there concern about the sister's
>> actions? Isn't there an executor?
>>
>> A little clearer explanation of the situation, including some dates
>> might help.
>
> Property owner died 9 years ago, but property still in his name.
> Property has doubled in value. 50% of what is coming will have capital
> gains.
>
> Executor is sister, who has broken more than one state law about her
> role as such. Some families are unwilling to go after a family member in
> court. Sister now wants property all in her name (assessed value is
> going up 24% for 2008) and wants to write IOUs (interest-free) for "five
> to ten years down the line". We want our money now. The posturing has
> begun.
>
> I file this under "inlaws".

The property may actually still be in his name, but it technically
belongs to the Estate of (his name), and when sold will generate taxable
income to the estate.

At this point however, and in view of this added information regarding
possible family dissension, you need to engage an attorney versed in
estate matters.

ChEAr$,
Harlan Lunsford, EA n LA


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