Rejecting part of a will

[smutlydog]

Texas
My father died yesterday and my brother sister I inherited several homes and a several ranches but we want to reject the home my mother lives in. She pays a discounted $900 a year in taxes. We would be paying over $3000. Maybe my father had a reason for doing it this way. Maybe he thought my mother would have trouble getting into an affordable nursing home if she owned property. I don't know. Any thoughts or suggestions.

 

[adjusterjack]

Have you a copy of the deed for that property? If not, get one from the county and see how the ownership reads. If it was owned jointly by your parents, then it is automatically hers.

If that's not the case then I'm sure that the probate attorney (that you should hire for such a large estate) should be able to file the appropriate paperwork for you and your siblings to disclaim the inheritance of that one property and get it into your mother's name.

 

[Litigator22]

Texas
My father died yesterday and my brother sister I inherited several homes and a several ranches but we want to reject the home my mother lives in. She pays a discounted $900 a year in taxes. We would be paying over $3000. Maybe my father had a reason for doing it this way. Maybe he thought my mother would have trouble getting into an affordable nursing home if she owned property. I don't know. Any thoughts or suggestions.

Should be rather easy. Consult an appropriate attorney regarding a "Family Settlement Agreement".

 

[zddoodah]

My father died yesterday and my brother sister I inherited several homes and a several ranches but we want to reject the home my mother lives in.

Condolences, but you haven't inherited anything yet. You will (almost certainly) need to go through probate.

She pays a discounted $900 a year in taxes. We would be paying over $3000.

Income taxes? Property taxes? Something else?

Any thoughts or suggestions.

Hire a good probate attorney. With an estate that includes "several homes and several ranches," you'd be a fool not to do so.

 

[Taxing Matters]

Texas
My father died yesterday and my brother sister I inherited several homes and a several ranches but we want to reject the home my mother lives in. She pays a discounted $900 a year in taxes. We would be paying over $3000.

My sympathy for the loss of your father. I suggest giving yourself at least a little time to grieve for the loss before tackling the issue of what should be done with the share of the home you are set to inherit from your father.

My comments on your post are general in nature and not legal advice. Also, since I have read the will nor do I know the details of your father's estate and what your mother owns, I'm going to make a few assumptions that may or may not be right. If one of those assumptions is not right that could change the tax options you'oo have. You'lI want to discuss any specific legal questions you have to a Texas attorney.

I assume she resides in Texas as that is the state you selected for this thread. That being the case, I'm assuming that you are referring to Texas property tax since Texas does not have a personal income tax nor does it have an inheritance tax. Many states provide a reduced property tax for senior citizens. Texas is a community property state, so she should still own her community interest in the home. All your father can pass via his will is his ownership in the property. So he cannot give away your mother's community propety interest in the home unless they entered into an agreement that says otherwise and the agreement would be enforceable under Texas law. With that in mind, it appears she would not lose her exemption. According to the Texas Comptroller website:

If the person age 65 or older dies, the surviving spouse may continue to receive the residence homestead exemption if the surviving spouse is age 55 or older at the time of death, has an ownership interest in the property and lives in the home as his or her primary residence. The surviving spouse may need to reapply for the exemption.​

The part of this that I have not researched is whether the entire home gets the reduced tax while she lives there, or only her ownership interest. If the entire home would still benefit from the homestead exemption that would solve your property tax problem.

Also because she lives in a community property and presumably the home was held as community property the federal income tax basis in the entire home is reset to the value of the home on the day your father died. She already has that benefit (and you do too if you inherit it). But if she inherits his interest in the home then when she dies the entire house would again get a reset of the basis of the home. If you inherit your father's share, then only the basis in the share she owns would get that basis adjustment at her death. The property interest you inherited from your father would not get that adjustment. So if you are sure you'll inherit the home when she dies there is an income tax benefit for you to having her own all of the home until she dies. If you want the benefit of the extra basis adjustment you get if she owns all of the property you will all need to execute disclaimers within 9 months of the day she died to achieve that. Note that you cannot direct where the interest you disclaim goes. That is determined by who inherit the home next if everyone who did the disclaimer had died before she did. A careful reading of your father's will and state intestate succession law would be needed to ensure you achieve the tax result you want. There may be more disclaimers needed than you realize depending on your family tree and what the will says. You'd want help from a tax professional for that. Because part of solving this problem requires legal as well as tax advice, a tax attorney would be what you want. A CPA or enrolled agent cannot give you legal advice.

There may be other considerations in making the disclaimer decision apart from tax issues that you need to take into account. A Texas property law attorney may be the best expert for that.