Estate final return

Forum|Forum|3 years ago
January 24, 2023
1 reply
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My dad had a vacant property in his name, which he inherited along with his 6 siblings from his father. Before he died he had the heirs of his siblings sign the property over to him. His intention was to sell the property and divide the proceeds among the 7 families equally. He would reimburse everyone who contributed to paying the property taxes over the years and then divide the remaining balance by 7 and give everyone their share. He always told us that was his intention. He died in 2010 and we never opened probate. My mother died in 2019 and we never did her probate either. Anyway we finally did probate for both of them in 2021. We found a buyer for the vacant land and sold it to him for 315000, lower than the cost basis. Is there a way to reimburse everyone for years of contributing to the land taxes? We distributed over 224000 to all the families and the rest of the money was earmarked for reimbursement of past year property tax payments to those who made them.

Best answer by Anonymous_

@0adestate wrote:

We found a buyer for the vacant land and sold it to him for 315000, lower than the cost basis.

Are you certain of your cost basis? It is likely that your cost basis is the fair market value on the date of death of your mother if you inherited the property directly from your mother in 2019.

Of course, everyone could be "reimbursed" for property taxes paid on the land over the years, but they will not be able to deduct any of the payments (or the toral) from their income taxes since payment of those taxes was not their obligation.

The distribution of proceeds to the families would be considered to be a gift at this point since you apparently had no legal obligation to make such a distribution if you father (or mother) did not leave a will or other testamentary document directing you to do so. In fact, if more than $16,000 (in 2022) was given from one individual to another, a gift tax return is required to be filed (Form 709).

See https://www.irs.gov/instructions/i709#en_US_2022_publink16784xd0e649

Your father's intention to divide the proceeds among the seven families should have been memorialized in writing, particularly in the form of a will or trust. Otherwise, the intention is nothing more than precatory and there is no legal obligation for anyone to carry out the instructions.

You might want to consult with local legal counsel.

See https://www.avvo.com/estate-planning-lawyer.html

A

Anonymous_Answer

Level 15

@0adestate wrote:

We found a buyer for the vacant land and sold it to him for 315000, lower than the cost basis.

Are you certain of your cost basis? It is likely that your cost basis is the fair market value on the date of death of your mother if you inherited the property directly from your mother in 2019.

Of course, everyone could be "reimbursed" for property taxes paid on the land over the years, but they will not be able to deduct any of the payments (or the toral) from their income taxes since payment of those taxes was not their obligation.

The distribution of proceeds to the families would be considered to be a gift at this point since you apparently had no legal obligation to make such a distribution if you father (or mother) did not leave a will or other testamentary document directing you to do so. In fact, if more than $16,000 (in 2022) was given from one individual to another, a gift tax return is required to be filed (Form 709).

See https://www.irs.gov/instructions/i709#en_US_2022_publink16784xd0e649

Your father's intention to divide the proceeds among the seven families should have been memorialized in writing, particularly in the form of a will or trust. Otherwise, the intention is nothing more than precatory and there is no legal obligation for anyone to carry out the instructions.

You might want to consult with local legal counsel.

See https://www.avvo.com/estate-planning-lawyer.html

0

0adestateAuthor

Level 2

Thank you for your quick response. My mother was not on title to the property so we assumed it was inherited from my father. But the land was sold at a lower price than the value at the time of my mother's death. Tax records show that it was valued at 367000 in 2019. My parents had a trust but that property was not placed in the trust. The actual tax records did still have all his siblings on title when we sold it. So we distributed most of the proceeds to all the heirs. The balance of 91000 was used to reimburse those who contributed to the taxes.