[WSBAPT] Sibling buy out

[Mike Winslow]

It sounds like you are ways down the road on this. but, your structure will
mandate excise tax unless the estate has other assets to allow non-prorata
distribution.
Consider instead simply putting house in trust with the three parties, with
the taking child having the right to live there rent free, with condition
they maintain the property, pay taxes and insurance etc.
Trust could then make disposition if the non-taking parties predecease the
taking child; could also provide for equal division of proceeds in event of
sale.
This would avoid the excise tax issue, while still protecting the non-taking
parties. 
 
Deed the property from the estate to the trust, thus creating the mechanism
to prevent improper distribution, without creating debt, more tax
ramification, gift tax issues, etc.
 
Michael A. Winslow
1204 Cleveland Ave.
Mount Vernon, WA 98273
Ph. 360-336-3321
Em. Mike at winslegal.com
 
This message is from an attorney, so it's confidential. If you are not the
intended recipient, it's too late to stop reading this message, but you may
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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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