3-way inheritance split

[Joel123]

What is the name of your state? California

My parents recently passed away and left a will stating their estate is to be split 1/3 each child. Leaving a house worth 600k with 40k left on the mortgage, 200k worth of stock. My question is what is the best way for me to end up with the house while making the split 1/3 all around? I would like to use little money as possible and keep taxes down. I wa thinking I could buy the house for 300k which would leave 300k cash and 200k in stock to the other two people involved, I this possible?

Thank you for your time.

 

[tecate]

Are you the executor? If not, what does the executor think about your wish? Does everyone else agree that you should end up with the home?

Assuming they do, future property taxes may be an issue. How close is the full cash value to fair market value?

 

[nextwife]

What is the name of your state? California

My parents recently passed away and left a will stating their estate is to be split 1/3 each child. Leaving a house worth 600k with 40k left on the mortgage, 200k worth of stock. My question is what is the best way for me to end up with the house while making the split 1/3 all around? I would like to use little money as possible and keep taxes down. I wa thinking I could buy the house for 300k which would leave 300k cash and 200k in stock to the other two people involved, I this possible?

Thank you for your time.

Have all estate debts been paid? Presuming so:

That shorts the other two by a combined amount of $6333. Presuming a proper closing is done and the current mortgage paid off.

House $600,000 - $40,000 mortgage= 560,000 equity

Stock $200,000 plus equity = $760,000 total

$760,000 /3 = $253,333 due to each.

 

[Dandy Don]

If you get the other 2 beneficiaries to agree to sell you a $600,000 home for $300,000 then you will be the luckiest person in the world. Make them that offer and see what they say. I understand that you would want to live there for sentimental value, but wouldn't everyone come out better if all 3 of you just agreed to sell the home and split the proceeds?

 

[divgradcurl]

Assuming they do, future property taxes may be an issue. How close is the full cash value to fair market value?

Just a minor nit -- you were referring to future capital gains taxes, not property taxes, correct?

 

[tecate]

divgradcurl, I was referring to property taxes. The Prop 13 full cash value for the personal residence won't change (assuming the executor files the proper return) because it passes from parent(s) to children. But the subsequent transfer between siblings of an undivided two-thirds interest could trigger a partial change of ownership, meaning a significant increase in future property taxes. So part of the executor's role may be to try to plan around this. Given the meteoric recent increases in home values in California, this could mean many thousands per year even if the parents owned the home for a relatively short time.

 

[divgradcurl]

divgradcurl, I was referring to property taxes. The Prop 13 full cash value for the personal residence won't change (assuming the executor files the proper return) because it passes from parent(s) to children. But the subsequent transfer between siblings of an undivided two-thirds interest could trigger a partial change of ownership, meaning a significant increase in future property taxes. So part of the executor's role may be to try to plan around this. Given the meteoric recent increases in home values in California, this could mean many thousands per year even if the parents owned the home for a relatively short time.

I agree that an inter-sibling transfer will cause a reevaluation of the property taxes, but that's pretty much irrelevant to the question unless the three siblings want to retain joint ownership of the property. If the will doesn't specify rolling the property into a testamentary trust or the like, it's probably too late to do anything about the property taxes, unless, like I said, the siblings want to retain ownership as joint owners.

You confused me with the part about the sales price of the shares -- that seemed to implicate you were concerned about the basis for future sale, which is why I thought maybe you were discussing capital gains.

 

[nextwife]

I agree that an inter-sibling transfer will cause a reevaluation of the property taxes, but that's pretty much irrelevant to the question unless the three siblings want to retain joint ownership of the property. If the will doesn't specify rolling the property into a testamentary trust or the like, it's probably too late to do anything about the property taxes, unless, like I said, the siblings want to retain ownership as joint owners.

You confused me with the part about the sales price of the shares -- that seemed to implicate you were concerned about the basis for future sale, which is why I thought maybe you were discussing capital gains.

I agree - it is irrelevant. Poster would need to pay property taxes on ANY home he purchased. Nobody should buy a home that, properly assessed and taxed, would be too expensive to manage.

 

[tecate]

divgradcurl, look to Board of Equalization Letter to Assessors 91-8 for planning possibilities. I emphasize possibilities, because I do not know what the will says, or whether the other devisees would want to go along with Joel123's wishes. Others posted about a possible sale, not me.

 

[nextwife]

divgradcurl, look to Board of Equalization Letter to Assessors 91-8 for planning possibilities. I emphasize possibilities, because I do not know what the will says, or whether the other devisees would want to go along with Joel123's wishes. Others posted about a possible sale, not me.

I wa thinking I could buy the house for 300k which would leave 300k cash and 200k in stock to the other two people involved, I this possible?

Thank you for your time.

A possible sale of sibling's inherited interest is the whole purpose of this thread. Thus we are responding to the poster's issue- how to equitably accomplish the buy-out of the other two third's interest.