Inheritance & Gift tax limits on estates

[wmcot]

What is the name of your state? Colorado and Utah

My brother died in March 2005 and I was listed as his personal representative and only heir or inheritor in his will. He was my half brother and he had a full sister. I wish to split the remaining balance from his estate with her (it's only fair.) I'm not 100% sure of the tax liability (if any) so I'll try to explain the situation. I want to figure this out since I'm now ready to close the estate.

So this is the way it looks to me: the estate was valued at $225,295.00 (turned out to be lower) on the inventory form filed with the court. Net value after encumbrances was estimated at $41,297.00 (ended up lower due to lower selling price on his home and repairs made on it). After liquidating the home and assets and paying all medical bills and creditors, the about $22,000.00 will remain in cash.

As the sole-listed inheritor, I would receive the entire $22,000. I would not owe taxes on this inheritance to either the federal government, Colorado, or Utah from what I have read.

I then send a check from my account to my sister for $11,000. This amount is under the gift tax limit for 2006 ($12,000.00 limit) so I don't owe taxes on this and neither does she (she is still in Colorado.)

Is this correct? If I owe taxes, I don't mind, I just want to do it correctly.

[LdiJ]

If that is really the way that it all boiled down...then you are home free. You can gift your sister half without worrying about it....there will be no tax implications.

[wmcot]

Originally Posted by LdiJ

If that is really the way that it all boiled down...then you are home free. You can gift your sister half without worrying about it....there will be no tax implications.

Thanks for the advice. That's the way I read the tax laws, but I wanted to be very careful when dealing with the government.