Yet Another Inherited Real Estate Question

[TurtleWax]

What is the name of your state (only U.S. law)? Washington

Perhaps this should be obvious but I'm having difficulty getting my head around what needs to be done.

My wife is executor of her father's estate (her mother is already deceased). She is one of four siblings, one of whom was excluded from the will because of her disability status (she can't inherit any cash without losing her disability status and benefits). So one quarter of the estate will go to my wife's brother and older sister and half will go to my wife, who will administer half of her portion(one quarter of the total) for her disabled sister's benefit.

The feeling among all the siblings is that my wife and I should live in the house, which is fully paid off (we currently rent). However, there are some repairs to be made on the house...primarily new windows and a new roof. We haven't had the house inspected or appraised yet, so we're not sure about fair market value and haven't had estimates on the repairs.

My question is, how is the best way to do this? It seems we should get a loan for 3/4 of the fair market value of the house and use the proceeds to buy out the interests of the two inheriting siblings and keep the remaining cash for the benefit of the disabled sibling. I presume we would be purchasing the house from the estate, but I'm not sure. But we don't have the money to pay for home repairs. When we have all the figures in hand, should we reach agreement with the other two siblings that their share will each be 1/4 of the fair market value minus 1/4 of the cost of repairs? Will each of them be treated as a seller in the transaction, and have to pay excise taxes and their own closing costs?

Thanks for any advice you have.

 

[justalayman]

You do not deduct the cost of repairs from anything. The value of the house is the value of the house. It would be worth more if the repairs were done so the cost of the repairs are already factored in.

As to closing costs and such:

If the title was never transferred to include the other heirs, the heirs would bear no liability for any associated costs. The estate is liable for its own debts.

As to what you have to purchase from the estate concerning the house:

Does the will specifically assign shares in the house, specifically, to each of the heirs and if so, what does it assign to each party?

If the estate was simply directed to be split 25%/25%/50% , then you.may be able to give a larger share of other assets to the two siblings and a greater share of te value of the house to your wife to reduce the amount of money you would have to borrow to buy out the sibling's remaining interest.

 

[OHRoadwarrior]

So the plan is to blatantly defraud the government?

 

[tranquility]

So the plan is to blatantly defraud the government?

The disabled sister is not in the will. If the parents had come into our office, we would have explored the concept of a special needs or supplement care trust. Such trusts have an ascertainable standard for distribution and can be structured to not hurt eligibility for government benefits. It's not fraud, it is well settled law. If the OP really wanted to protect sister, she would set one up with the share that is supposed to go to sister. (As it is, the money might be considered in a resulting trust for sister--depending on the understanding of the deceased.)

 

[Ohiogal]

Actually what each gets is determined by the will. So what does the will state regarding shares?

 

[OHRoadwarrior]

The disabled sister is not in the will. If the parents had come into our office, we would have explored the concept of a special needs or supplement care trust. Such trusts have an ascertainable standard for distribution and can be structured to not hurt eligibility for government benefits. It's not fraud, it is well settled law. If the OP really wanted to protect sister, she would set one up with the share that is supposed to go to sister. (As it is, the money might be considered in a resulting trust for sister--depending on the understanding of the deceased.)

A special needs trust has not been set up. What has been set up is the intentional misdirection of money. It is a valid question if they are planning to use the money to defraud the government. Don't be so quick to defend intentions you know nothing of.

 

[tranquility]

A special needs trust has not been set up. What has been set up is the intentional misdirection of money. It is a valid question if they are planning to use the money to defraud the government. Don't be so quick to defend intentions you know nothing of.

It's not fraud. Sister was not in the will. The money is not legally hers. However, if the intentions of the deceased was for the family to give sister her share, there is what is known (Arguably, it would be in equity and not at law in this instance.) as a resulting trust. (Depending on the exact facts, perhaps a constructive trust.) What are the terms of the trust? It seems to me the intent was to give sister money and not lose government benefits. So, to adhere to the wishes of the deceased, the terms of the trust should accomplish that. Sister reports to the governmental agencies the amounts she receives according to the law and no one gets in trouble. If sister gets all the money whenever she wants it and does not report the corpus as an asset, THAT would be fraud. Sister's fraud, not OP.

 

[OHRoadwarrior]

It's not fraud. Sister was not in the will. The money is not legally hers. However, if the intentions of the deceased was for the family to give sister her share, there is what is known (Arguably, it would be in equity and not at law in this instance.) as a resulting trust. (Depending on the exact facts, perhaps a constructive trust.) What are the terms of the trust? It seems to me the intent was to give sister money and not lose government benefits. So, to adhere to the wishes of the deceased, the terms of the trust should accomplish that. Sister reports to the governmental agencies the amounts she receives according to the law and no one gets in trouble. If sister gets all the money whenever she wants it and does not report the corpus as an asset, THAT would be fraud. Sister's fraud, not OP.

Soooo, now that you have had your ummmm, rant, we get back to my original question.

So the plan is to blatantly defraud the government?

 

[TurtleWax]

???

Soooo, now that you have had your ummmm, rant, we get back to my original question.

So the plan is to blatantly defraud the government?

I'd like to know where the "fraud" is, here. If it had been up to me (after all, I'm only the executor's husband and wasn't present at or part of the drawing up of the will), there would have been a trust established. Nonetheless, according to my understanding, the attorney involved consulted with another attorney specializing in Social Security issues and they determined this was the simplest way to write the will for the benefit of the disabled sister. When we gift her a small amount of money each month, she will retain her food stamps, disability payments and rent controlled apartment. The law says she can receive a certain amount of income each month that will not conflict with her disability payments and status, and our intent is to dole out her inheritance in this manner.

To my mind, a trust as mentioned here is a better plan, but I had no say in the matter. However, since I'm sleeping with the executor, she has been known to listen to my ideas, and we may be able to put something like it into place on our own.

 

[TurtleWax]

Actually what each gets is determined by the will. So what does the will state regarding shares?

My understanding is the assets of the estate are to be split 25-25-50. (I haven't actually read the will -- yet. I get to do things like ask these questions because I'm more Internet savvy and write better than my wife. She makes the decisions... I merely do as she asks and tell her what I find out.)

 

[tranquility]

Soooo, now that you have had your ummmm, rant, we get back to my original question.

So the plan is to blatantly defraud the government?

Before you accuse others of a crime, you should probably be correct. Let's do this another way since you seem to have little knowledge of the laws on which you opine or the ability to think legally.

OP has inherited stuff. Is it disabled sister's? No. Disabled sister or anyone cannot say anything differently--at this time.

Now, if disabled sister felt robbed by OP because OP promised deceased she would take care of disabled sister (DS), does DS get her share. No. Disabled sister or anyone cannot say anything differently--at this time.
If DS then sues on the theory of resulting trust or constructive trust would she win? Maybe. It is not a sure thing as it would be in equity (Fairness for the less legally knowledgeable.), but I think it is a chance. To tell the terms of the trust would require the sound discretion of the court. If the court found for the trust and if the court awarded all funds without restriction and if sister did not report getting the funds, would there be fraud? Yes. THEN there would be fraud.

Instead, let's say DS doesn't sue. Can OP now set up a special needs trust for DS? Dang skippy, spunky. DS currently has no legal ownership of the funds. OP does. If OP gifts into a special needs trust the assets, then sister is taken care of for her supplementary needs for as long as the assets hold out. However, say OP does not create such a trust and just gives DS the money as needed. Is that fraud? Nope. Since sister does not have a legal duty at this time, she can give or not as she pleases. DS must report what she gets appropriately, but since she would have no legal say about the timing, amounts or purpose, anything the OP might give in the future is irrelevant to what she would report as her assets.

 

[tranquility]

I'd like to know where the "fraud" is, here. If it had been up to me (after all, I'm only the executor's husband and wasn't present at or part of the drawing up of the will), there would have been a trust established. Nonetheless, according to my understanding, the attorney involved consulted with another attorney specializing in Social Security issues and they determined this was the simplest way to write the will for the benefit of the disabled sister. When we gift her a small amount of money each month, she will retain her food stamps, disability payments and rent controlled apartment. The law says she can receive a certain amount of income each month that will not conflict with her disability payments and status, and our intent is to dole out her inheritance in this manner.

To my mind, a trust as mentioned here is a better plan, but I had no say in the matter. However, since I'm sleeping with the executor, she has been known to listen to my ideas, and we may be able to put something like it into place on our own.

All who post are nothing more than what is says at the bottom of the page. Some have more knowledge and some have less. You may determine which is which by the way things are explained.

 

[TurtleWax]

You do not deduct the cost of repairs from anything. The value of the house is the value of the house. It would be worth more if the repairs were done so the cost of the repairs are already factored in.

As to closing costs and such:

If the title was never transferred to include the other heirs, the heirs would bear no liability for any associated costs. The estate is liable for its own debts.

As to what you have to purchase from the estate concerning the house:

Does the will specifically assign shares in the house, specifically, to each of the heirs and if so, what does it assign to each party?

If the estate was simply directed to be split 25%/25%/50% , then you.may be able to give a larger share of other assets to the two siblings and a greater share of te value of the house to your wife to reduce the amount of money you would have to borrow to buy out the sibling's remaining interest.

It was our thought that the repairs would be done AFTER dispersal of assets...because the value of the house is as of date of death, not as of completion of repairs. Is it possible for the estate to pay for the necessary repairs, thereby increasing the value of the house before dispersal? I hadn't thought of that. The title presently resides with the deceased...therefore, I presume, his estate... and has not yet passed to any other party.

The house is not mentioned specifically in the will, to my knowledge (I haven't read it yet...I just ask questions as my wife, the executor, requests I do). I believe it's the value of the estate as a whole that is to be divided 25-25-50.

 

[Zigner]

Does the will direct you to pay a small amount to sis each month?

 

[OHRoadwarrior]

My, My, My, Stiiiillllll ranting!!! I can tell somebody is stuck on a rainy day with nothing to do. I suggest you review my posts. Nowhere, did I say anyone was committing a crime. I simply asked whether that was the intent. If you have a specific issue, other than tripping over yourself to troll, I suggest you do so or stop hijacking the thread.

Before you accuse others of a crime, you should probably be correct. Let's do this another way since you seem to have little knowledge of the laws on which you opine or the ability to think legally.

OP has inherited stuff. Is it disabled sister's? No. Disabled sister or anyone cannot say anything differently--at this time.

Now, if disabled sister felt robbed by OP because OP promised deceased she would take care of disabled sister (DS), does DS get her share. No. Disabled sister or anyone cannot say anything differently--at this time.
If DS then sues on the theory of resulting trust or constructive trust would she win? Maybe. It is not a sure thing as it would be in equity (Fairness for the less legally knowledgeable.), but I think it is a chance. To tell the terms of the trust would require the sound discretion of the court. If the court found for the trust and if the court awarded all funds without restriction and if sister did not report getting the funds, would there be fraud? Yes. THEN there would be fraud.

Instead, let's say DS doesn't sue. Can OP now set up a special needs trust for DS? Dang skippy, spunky. DS currently has no legal ownership of the funds. OP does. If OP gifts into a special needs trust the assets, then sister is taken care of for her supplementary needs for as long as the assets hold out. However, say OP does not create such a trust and just gives DS the money as needed. Is that fraud? Nope. Since sister does not have a legal duty at this time, she can give or not as she pleases. DS must report what she gets appropriately, but since she would have no legal say about the timing, amounts or purpose, anything the OP might give in the future is irrelevant to what she would report as her assets.