[WSBAPT] Sibling buy out

[Lisa Schuchman]

I have used a Note with annual gifting by the payees in a similar situation.  It was a family and the family members trusted each other, which would make a difference.  This eliminated the tax issues.

Lisa E. Schuchman
206-960-4212
www.lisaschuchman.com<http://www.lisaschuchman.com/>

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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of jeffrey winter
Sent: Wednesday, November 16, 2016 4:31 PM
To: WSBA Probate & Trust Listserv
Subject: [WSBAPT] Sibling buy out


Listmates,



I have an estate where mom died leaving 3 beneficiaries -- two children, and the surviving spouse of a third child who survived the parent, but died shortly afterward.  Surviving spouse takes the deceased child's share under a Community Property Agreement (Will had specified to the three children "share and share alike", with no provision for descendants of a deceased child taking...).



One child is residing in mom's home, and wishes to stay there (the "taking child") -- the other child and the surviving spouse of the decease child, would like the taking child to be able to live at mom's house, but wish to be protected in the event it is sold.  The plan presently is for mom's estate to convey the house to the taking child, subject to a note and second deed of trust in favor of the sibling and surviving spouse.  The sibling and surviving spouse intend to forgive the payments due under the note, but -- in the event the house is sold-- would have their interests protected.



There will be a TEDRA outlining this arrangement -- the question is:  do we refer to the intent to forgive payments under the note in the TEDRA?  I would think that to be fair to the taking child, we would...but I'm concerned about what effect this might have with respect to excise and/or income taxes.



Jeff Winter



Law Office of Jeffrey D. Winter, P.S.

604 North Main Street

Ellensburg, WA 98926

(509) 925-9600
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