Inheritance of farm from trust

[carpema]

When my mother-in-law died, 10/30/24 in Oregon, the 4 children (all adults1 in Oregon, 3 in Washington) received the farm in a trust.  The trust sold the farm and the proceeds were split between four of us ($300,000 each).  Do we need to claim this on our 2024 return or is it exempt?    Do the Washington people need to file an Oregon tax return?

Thank you,

Michael Carpenter

[email address removed] 

[tagteam]

I would recommend that the adult beneficiary in Oregon consult with local legal counsel and/or a tax professional conversant with Oregon income tax and estate tax law.

Oregon has an estate tax and the threshold is rather low (as in around $1,000,000).

The property will likely receive a basis stepped up to its fair market value on the date of death of your mother-in-law but that would be dependent on the type of trust and its terms.

I am sorry for your loss (and did she actually pass today? You wrote 10/30/24?).

[quorumof1]

There are estate considerations which have been given.

Typically after estate considerations, residual trust income might pass to the beneficiary through form K-1, which would have to be included on individual tax returns.  The land, however, would not have to be reported until actually sold by beneficiary with stepped up basis consideration. (which is a good thing).

[tagteam]

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@quorumof1 wrote:

The land, however, would not have to be reported until actually sold by beneficiary......

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@carpema wrote: "....The trust sold the farm....."

I would have to presume that the trust's sale of the farm included the land and, otherwise, not distributed in kind to the beneficiaries.

[carpema]

Thank you and no it was 10/30/2023

[tagteam]

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@carpema wrote:

Thank you and no it was 10/30/2023

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Did you and/or the other beneficiaries, receive a K-1 (1041)?

How about an Oregon K-1 (I believe OR-K-1)?

[carpema]

Not yet...  The Property was sold in February 2024

[tagteam]

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@carpema wrote:

Not yet...  The Property was sold in February 2024

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That's a good thing.

Are you the trustee (or co-trustee)? If not, you have time to contact that individual concerning the details.