Inheritance Q

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Is there context missing on why they would gift their house to this sibling specifically? If, as you say, all of you have houses and mortgages of your own right now?

Because this is odd, and I'm trying to understand.

There's got to be more to this.

I am also trying to understand. I think the sibling suggested it and my parents went for it. They also didn't tell us all together. I called one sibling a week after I found out (because my parents asked me not to saying anything to my other siblings when they told me, since they wanted to tell my other siblings) and he still had no idea. I don't think it's intentional, but I think that my parents haven't thought this through and that they're doing this in a way that is really destructive for our relationships.

Any insights into your sibling's motivations? Is she financially literate enough to know the implications for other siblings as well as the tax and estate implications? Does she care if she has good relations with the rest of you?

Sibling is jealous and insecure and likes having nice things. Sibling would not be able to afford a very nice house in a very nice area (mkt value is close to $3M), so this is the best way to do it. Sibling definitely does not understand tax implications, but parents will probably take care of that for sibling...and not a concern. Sibling understands that getting house now is better for them than getting house in 30 years from an estate standpoint, since it's worth so much less now than it will be in 30 years and thus, represents a smaller part of the estate. Sibling also understands no mortgage and implications of being able to sell current home [b]and keep equity to invest in market, buy nice things, go on expensive vacations, etc.

I thought from OP that sibling does not currently have a house. So her plan is to get your parent's house for free then sell it? Somehow, this makes the plan sound even odder..

My siblings and I all own houses and my parents are planning on moving from their current house. My parents would give a sibling with a house their house, which means that sibling would have two houses. This would enable that sibling to sell their current home and move into my parent's house.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Is there context missing on why they would gift their house to this sibling specifically? If, as you say, all of you have houses and mortgages of your own right now?

Because this is odd, and I'm trying to understand.

There's got to be more to this.

I am also trying to understand. I think the sibling suggested it and my parents went for it. They also didn't tell us all together. I called one sibling a week after I found out (because my parents asked me not to saying anything to my other siblings when they told me, since they wanted to tell my other siblings) and he still had no idea. I don't think it's intentional, but I think that my parents haven't thought this through and that they're doing this in a way that is really destructive for our relationships.

Any insights into your sibling's motivations? Is she financially literate enough to know the implications for other siblings as well as the tax and estate implications? Does she care if she has good relations with the rest of you?

Sibling is jealous and insecure and likes having nice things. Sibling would not be able to afford a very nice house in a very nice area (mkt value is close to $3M), so this is the best way to do it. Sibling definitely does not understand tax implications, but parents will probably take care of that for sibling...and not a concern. Sibling understands that getting house now is better for them than getting house in 30 years from an estate standpoint, since it's worth so much less now than it will be in 30 years and thus, represents a smaller part of the estate. Sibling also understands no mortgage and implications of being able to sell current home and keep equity to invest in market, buy nice things, go on expensive vacations, etc.

This is why you need to appeal to your sister’s greed. Doing it this way is actually quite stupid from her perspective. Assuming your parent’s basis is quite low, the basis change alone (vs. inheritance) could mean paying capital gains on millions when she sells. Any good estate lawyer will try to talk your parents out of doing it this way. IME, a good lawyer will also try to suggest doing it in a way that is fair to all the siblings.

[Anonymous]

Anonymous wrote:My parents are kind of considering something similar but not exactly the same with my brother. My parents, brother, and 90-year-old grandmother all live in the same town. My brother is in his mid 30s and rents an apartment with a roommate, and I own a condo with my husband in DC. My parents have said that they would let my brother live in my grandmother's house when she passes away as long as he pays all the expenses/property taxes/etc. There hasn't been talk of giving him the house though, just of letting him live there at a discount.

This does not bother me even though I am paying a mortgage and feel unable to afford a house in a neighborhood where I would want to live. I have more means than my brother and so am ok with them helping him out in this way. I also feel fortunate that my parents are well off, we will not need to pay for their care as they age, and that we are likely to get a comfortable inheritance down the line. My husband's family has been in the opposite situation, where my MIL went through bankrputcy and was living off of SS alone, and that has been very stressful for my husband and his siblings. The possibility of an inheritance seems like a big bonus over and above knowing that my parents have enough to provide for themselves.

I think I don't feel badly because I feel fortunate for what I might end up getting and for what my parents have already given me. My brother lived with my parents for awhile and they have also bought him cars, but they paid for college for me and it was a lot more than my brother's education. My brother also is more of a caretaker personality than I am, and he already helps my parents/grandparents out more than I do from afar. So I think it all evens out in my mind.

My spouse is in a similar situation as you and I think that's a pretty different situation from the one that I'm describing and wouldn't be something that would bother me. It's the large transference of an asset to one sibling and not to other siblings with no real discussion and the framing of that as equitable, when it's obviously not, that bothers me.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Is there context missing on why they would gift their house to this sibling specifically? If, as you say, all of you have houses and mortgages of your own right now?

Because this is odd, and I'm trying to understand.

There's got to be more to this.

I am also trying to understand. I think the sibling suggested it and my parents went for it. They also didn't tell us all together. I called one sibling a week after I found out (because my parents asked me not to saying anything to my other siblings when they told me, since they wanted to tell my other siblings) and he still had no idea. I don't think it's intentional, but I think that my parents haven't thought this through and that they're doing this in a way that is really destructive for our relationships.

Any insights into your sibling's motivations? Is she financially literate enough to know the implications for other siblings as well as the tax and estate implications? Does she care if she has good relations with the rest of you?

Sibling is jealous and insecure and likes having nice things. Sibling would not be able to afford a very nice house in a very nice area (mkt value is close to $3M), so this is the best way to do it. Sibling definitely does not understand tax implications, but parents will probably take care of that for sibling...and not a concern. Sibling understands that getting house now is better for them than getting house in 30 years from an estate standpoint, since it's worth so much less now than it will be in 30 years and thus, represents a smaller part of the estate. Sibling also understands no mortgage and implications of being able to sell current home and keep equity to invest in market, buy nice things, go on expensive vacations, etc.

This is why you need to appeal to your sister’s greed. Doing it this way is actually quite stupid from her perspective. Assuming your parent’s basis is quite low, the basis change alone (vs. inheritance) could mean paying capital gains on millions when she sells. Any good estate lawyer will try to talk your parents out of doing it this way. IME, a good lawyer will also try to suggest doing it in a way that is fair to all the siblings.

Thank you for pointing this out! I have no idea what basis is. Can you explain further?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Is there context missing on why they would gift their house to this sibling specifically? If, as you say, all of you have houses and mortgages of your own right now?

Because this is odd, and I'm trying to understand.

There's got to be more to this.

I am also trying to understand. I think the sibling suggested it and my parents went for it. They also didn't tell us all together. I called one sibling a week after I found out (because my parents asked me not to saying anything to my other siblings when they told me, since they wanted to tell my other siblings) and he still had no idea. I don't think it's intentional, but I think that my parents haven't thought this through and that they're doing this in a way that is really destructive for our relationships.

Any insights into your sibling's motivations? Is she financially literate enough to know the implications for other siblings as well as the tax and estate implications? Does she care if she has good relations with the rest of you?

Sibling is jealous and insecure and likes having nice things. Sibling would not be able to afford a very nice house in a very nice area (mkt value is close to $3M), so this is the best way to do it. Sibling definitely does not understand tax implications, but parents will probably take care of that for sibling...and not a concern. Sibling understands that getting house now is better for them than getting house in 30 years from an estate standpoint, since it's worth so much less now than it will be in 30 years and thus, represents a smaller part of the estate. Sibling also understands no mortgage and implications of being able to sell current home [b]and keep equity to invest in market, buy nice things, go on expensive vacations, etc.

I thought from OP that sibling does not currently have a house. So her plan is to get your parent's house for free then sell it? Somehow, this makes the plan sound even odder..

My siblings and I all own houses and my parents are planning on moving from their current house. My parents would give a sibling with a house their house, which means that sibling would have two houses. This would enable that sibling to sell their current home and move into my parent's house.

Well there you have it. Sibling sells current house and has proceeds for a down payment on your parent's house. Your parents take back a mortgage at a fair market rate (actually required to avoid gifting implications). Your sibling gets family house she may be attached to, but no other sibling is worse off.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Is there context missing on why they would gift their house to this sibling specifically? If, as you say, all of you have houses and mortgages of your own right now?

Because this is odd, and I'm trying to understand.

There's got to be more to this.

I am also trying to understand. I think the sibling suggested it and my parents went for it. They also didn't tell us all together. I called one sibling a week after I found out (because my parents asked me not to saying anything to my other siblings when they told me, since they wanted to tell my other siblings) and he still had no idea. I don't think it's intentional, but I think that my parents haven't thought this through and that they're doing this in a way that is really destructive for our relationships.

Any insights into your sibling's motivations? Is she financially literate enough to know the implications for other siblings as well as the tax and estate implications? Does she care if she has good relations with the rest of you?

Sibling is jealous and insecure and likes having nice things. Sibling would not be able to afford a very nice house in a very nice area (mkt value is close to $3M), so this is the best way to do it. Sibling definitely does not understand tax implications, but parents will probably take care of that for sibling...and not a concern. Sibling understands that getting house now is better for them than getting house in 30 years from an estate standpoint, since it's worth so much less now than it will be in 30 years and thus, represents a smaller part of the estate. Sibling also understands no mortgage and implications of being able to sell current home [b]and keep equity to invest in market, buy nice things, go on expensive vacations, etc.

I thought from OP that sibling does not currently have a house. So her plan is to get your parent's house for free then sell it? Somehow, this makes the plan sound even odder..

My siblings and I all own houses and my parents are planning on moving from their current house. My parents would give a sibling with a house their house, which means that sibling would have two houses. This would enable that sibling to sell their current home and move into my parent's house.

Well there you have it. Sibling sells current house and has proceeds for a down payment on your parent's house. Your parents take back a mortgage at a fair market rate (actually required to avoid gifting implications). Your sibling gets family house she may be attached to, but no other sibling is worse off.

Meant to add even better if your parents simply sell the house to your sister and she gets a mortgage from a bank (if she can qualify).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Is there context missing on why they would gift their house to this sibling specifically? If, as you say, all of you have houses and mortgages of your own right now?

Because this is odd, and I'm trying to understand.

There's got to be more to this.

I am also trying to understand. I think the sibling suggested it and my parents went for it. They also didn't tell us all together. I called one sibling a week after I found out (because my parents asked me not to saying anything to my other siblings when they told me, since they wanted to tell my other siblings) and he still had no idea. I don't think it's intentional, but I think that my parents haven't thought this through and that they're doing this in a way that is really destructive for our relationships.

Any insights into your sibling's motivations? Is she financially literate enough to know the implications for other siblings as well as the tax and estate implications? Does she care if she has good relations with the rest of you?

Sibling is jealous and insecure and likes having nice things. Sibling would not be able to afford a very nice house in a very nice area (mkt value is close to $3M), so this is the best way to do it. Sibling definitely does not understand tax implications, but parents will probably take care of that for sibling...and not a concern. Sibling understands that getting house now is better for them than getting house in 30 years from an estate standpoint, since it's worth so much less now than it will be in 30 years and thus, represents a smaller part of the estate. Sibling also understands no mortgage and implications of being able to sell current home [b]and keep equity to invest in market, buy nice things, go on expensive vacations, etc.

I thought from OP that sibling does not currently have a house. So her plan is to get your parent's house for free then sell it? Somehow, this makes the plan sound even odder..

My siblings and I all own houses and my parents are planning on moving from their current house. My parents would give a sibling with a house their house, which means that sibling would have two houses. This would enable that sibling to sell their current home and move into my parent's house.

Well there you have it. Sibling sells current house and has proceeds for a down payment on your parent's house. Your parents take back a mortgage at a fair market rate (actually required to avoid gifting implications). Your sibling gets family house she may be attached to, but no other sibling is worse off.

Meant to add even better if your parents simply sell the house to your sister and she gets a mortgage from a bank (if she can qualify).

I agree that this would be ideal, but the house is way outside of my siblings budget. There's no way my sibling could afford the mortgage and taxes on the house. To put it into perspective, the house is worth about $3M and my siblings current home is worth about $700K. No idea what my siblings taxes are, but taxes on the house are probably around $30K.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Is there context missing on why they would gift their house to this sibling specifically? If, as you say, all of you have houses and mortgages of your own right now?

Because this is odd, and I'm trying to understand.

There's got to be more to this.

I am also trying to understand. I think the sibling suggested it and my parents went for it. They also didn't tell us all together. I called one sibling a week after I found out (because my parents asked me not to saying anything to my other siblings when they told me, since they wanted to tell my other siblings) and he still had no idea. I don't think it's intentional, but I think that my parents haven't thought this through and that they're doing this in a way that is really destructive for our relationships.

Any insights into your sibling's motivations? Is she financially literate enough to know the implications for other siblings as well as the tax and estate implications? Does she care if she has good relations with the rest of you?

Sibling is jealous and insecure and likes having nice things. Sibling would not be able to afford a very nice house in a very nice area (mkt value is close to $3M), so this is the best way to do it. Sibling definitely does not understand tax implications, but parents will probably take care of that for sibling...and not a concern. Sibling understands that getting house now is better for them than getting house in 30 years from an estate standpoint, since it's worth so much less now than it will be in 30 years and thus, represents a smaller part of the estate. Sibling also understands no mortgage and implications of being able to sell current home [b]and keep equity to invest in market, buy nice things, go on expensive vacations, etc.

I thought from OP that sibling does not currently have a house. So her plan is to get your parent's house for free then sell it? Somehow, this makes the plan sound even odder..

My siblings and I all own houses and my parents are planning on moving from their current house. My parents would give a sibling with a house their house, which means that sibling would have two houses. This would enable that sibling to sell their current home and move into my parent's house.

Well there you have it. Sibling sells current house and has proceeds for a down payment on your parent's house. Your parents take back a mortgage at a fair market rate (actually required to avoid gifting implications). Your sibling gets family house she may be attached to, but no other sibling is worse off.

Meant to add even better if your parents simply sell the house to your sister and she gets a mortgage from a bank (if she can qualify).

I agree that this would be ideal, but the house is way outside of my siblings budget. There's no way my sibling could afford the mortgage and taxes on the house. To put it into perspective, the house is worth about $3M and my siblings current home is worth about $700K. No idea what my siblings taxes are, but taxes on the house are probably around $30K.

*sibling's

[Anonymous]

What happens if your parents give your sister the house and then spend all of their money on health care or a bad investment? I think the fair thing to do would be to let your sister live in the house (and sell her own house) and pay you and your brother rent in the amount of a mortgage for your share of the sale proceeds. At the end of the mortgage period she would own the house outright or she could buy you out for cash when your parents die and title transfers to her.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My parents are moving and want to give one of my siblings their current house (worth a few million) which this sibling would use as their new primary residence. We all have families and all own our homes, but have mortgages. We also all work, as do our spouses. My parents have floated that if this property transfer occurred they would take the market value of the house when they deed it over to sibling out of that sibling's portion of their estate. However, I don't think that this is fair. This sibling will not only have a huge asset and no mortgage in their 30s, they will be able to take the equity from the sale of their other house and put it into the market where it will grow exponentially. When the rest of us inherit our portions of the estate, the house will be worth considerably more than it is now and the sibling's equity (if put into the market) will have also grown considerably. I have not said anything yet, but I think that if this sibling is given a home worth a few million that the other siblings should be given the same amount in stock/cash. Does this sound fair? Is there anything I'm not thinking of here?

Two things you are not thinking about:

1. How greedy you are.
2. How it is none of your business what your parents do with their money.

Why is OP greedy? Fairness and wanting equal distribution is not greed. If anything, sibling is greedy. Obviously the parents can do what they want with their money, but if they want to avoid resentment and conflict and estrangement, they would be wise to come up with a plan for equal distribution. Talking to an estate lawyer may be warranted.

[Anonymous]

Where are your parents moving and how far away will each sibling be living from them?

[Anonymous]

Do your parents have an emotional tie to the house and a want to keep it in the family? When did they move into the house?

[Anonymous]

Anonymous wrote:That’s not a smart way to do it, anyway. Giving a million dollar asset to your sibling now has significant tax implications. It will need to be documented with the IRS as a gift and count against your parent’s lifetime estate tax exemption. Your sibling will also get your parent’s basis, as opposed to a stepped up basis if they inherited it. The estate tax exemption might not matter under the current exemption, but the current level sunsets in the next few years and there is no guarantee what the level will be in the future. It could be significantly less.

The best thing you could do here is suggest to your parents that they get some good tax advice STAT. There are probably creative solutions involving trusts that could be structured to let your sibling have use of the house while making it fair for the other heirs, in a way that would also maximize the tax benefits of the inheritance laws.

Excellent points. In your shoes, OP, I would schedule a time to talk to your parents and make the following points as dispassionately as you can:

1. Recognizing that we’re talking about your assets and you have an absolute right to do with them what you want, have you thought through what this transfer would do to family dynamics? Any way you look at it, you would be giving one and only one sibling a massive windfall and quality of life upgrade. I can’t tell you that I’ll be able to carry on the way we always have in the face of that kind of favoritism. I would definitely try because I love you and know your intentions are good, but what you are proposing is hurtful to the rest of us.

2. If you decide to move ahead with this, I’d recommend you contact an estate or tax expert, because my understanding is that a gift, rather than an inheritance, could lead to significant unwanted tax liability [for reasons mentioned by smart PP above].

[Anonymous]

Parents should divide estates equally among children unless one child could never handle money (like is a compulsive gambler). All the people saying parents can do what they want - that is true. But if you favor one child in your estate then you are basically dropping a bomb on the family and giving the other siblings the middle finger. Why would parents make estate division a source of causing hurt in the family?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Is there context missing on why they would gift their house to this sibling specifically? If, as you say, all of you have houses and mortgages of your own right now?

Because this is odd, and I'm trying to understand.

There's got to be more to this.

I am also trying to understand. I think the sibling suggested it and my parents went for it. They also didn't tell us all together. I called one sibling a week after I found out (because my parents asked me not to saying anything to my other siblings when they told me, since they wanted to tell my other siblings) and he still had no idea. I don't think it's intentional, but I think that my parents haven't thought this through and that they're doing this in a way that is really destructive for our relationships.

Whether you let this be destructive to your relationship with your sibling or your parent is ENTIRELY within your control. The house transfer situation is out of your control, but you can choose whether you let this impact how you feel about your family members. Another option would be to feel blessed that you have family wealth, regardless of how much eventually passes to you vs. other siblings.