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grammahony

Any Opinion Welcome/Just Wondering

17 years ago

My maternal grandparents had a 680 acre farm. Each child (4) was given 5 acres of river frontage. Mom leases out some lots to other people to put their trailers on. This is on 2 of the acres. Of the remaining 3 acres she's sold the house and 1 acre of ground she and dad had built when dad retired. They bought a home in Texas. Dad got sick, and they moved back here, and dad died a year later. So that leaves 2 acres. About 18 years ago she gave each of us girls, me and my 2 sisters a spot 100 feet wide where I have my travel trailer. Next to me is my older sister and her mobil home (house trailer which is falling apart)and a bunch of junk. She's had a lot of heart problems. And financial problems before the heart problems. My other sister let my DD and her family use her ground.

Now, my question.

When my mom passes on, it'll be ours. I think she should deed it to us now, maybe saving some taxes later on, and other problems. But besides that, what should I do to have my portion protected against some legal problems down the road. Say my sister passes on. Then it goes to her kids and husband. One is a recovering ? alcoholic and the other was on meth, but has since cleaned up his act. I just want to protect my intrest.

Leslie

Comments (25)

  • 17 years ago

    You might consult a lawyer regarding this. Also, just giving you the property may cause problems. Some states have inheritance taxes, and also zoning may be involved. Some states just don't allow a person to "give" acres away. You really need some legal advice. Also the people leasing out the other lots may or may not be able to continue to do so.

  • 17 years ago

    I'd list it in 2 names. Your Mom and you on yours. Your Mom and your sister on hers. Then its easier to remove one name.
    DH's Uncle owned some farm land, his name was the only one on the acreage. He died and his wife had to take his off and switch it to hers. She listed her children and herself.
    DH and his DB own 120 acres....their names are the only ones on the land, I don't care about myself but for petes sake DH should put the kids's names on it IMO. He doesn't like thinking ahead and in fact would rather not even think about it! He makes me so mad some days. Its the same with the business. His name on the deed. Property taxes come in both our names.

    Inheritance taxes I thought had to be a fairly large estate? I'm talking like a million dollars or something.

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  • 17 years ago

    Marie, mom has said I'll be the one to continue the other people leasing business because I've been there the most and know them all well. I believe gramma and grampa just gave/deeded the 5 acres to them. Of course they had to draw up legal description.

  • 17 years ago

    Does your mother have a Will, a Trust or anything?

    As for giving it to you, you'd need to know if the gift tax (if any) is higher, lower or the same as inheritance tax (if any). Depending on the location and situation there could be a capital gains issue. It could be set up for you to buy it from her and she could bequeath the balance to you on her death. If she were to give it to you now, you have to be careful on how that's handled since many if no most states don't allow people to give away their estates right before they die since it's looked at as tax evasion.

    I'm unclear on About 18 years ago she gave each of us girls, me and my 2 sisters a spot 100 feet wide where I have my travel trailer. Did she give and DEED it to you? If so I don't really see an issue for you. If it's that she just let you use it, that's something different. I guess if things were to get nasty, there could even be an Adverse Posession claim by the kids if they've met the criteria for the requisite period of time and if AP is recognized in your state.

    As for the concern over your sister, the Will could easily be written with a survivorship requirement for her to inherit and her family won't get it if she doesn't survive if that's your mom's desire.

    I'm not sure how your interests would be jeopardized by past drug/alcohol use. It could conceivably be beneficial if you wanted to buy it or pick it up on tax forfeiture if that happens.

    I'm still a little unclear of the concerns.

  • 17 years ago

    Well, for instance. This past weekend, a 19 year old boy drowned. Now, if this boy had been on our/mom's property, they could sue, and take it all. I don't want to be sued and lose all the property should something happen. No, it hasn't been deeded to us. That is what I think should be done now. Mom is 83. She's like the energizer bunny, which I'm grateful for. But, I will go to the lawyer mom used to draw up her will.
    I'm going to chat with my two sisters too.
    No, I there won't be inheritance tax. I think it's $600,000 per person. Or it was.

  • 17 years ago

    Make sure you get legal advice and everything in writing and protect yourself JMHO

  • 17 years ago

    One more thing to consider. If the original land was undivided (one tract of land) it would have to have been subdivided to be sold or given away in parcels. I don't see that having been done. So, the land being used by you and your siblings and the people using the acreage for their trailers do not have title to it. You and your mother need to see an attorney to see what needs to be done to divide it up the way your mother wants it done and what to do to preserve those parcels for you and your siblings. Assuming she doesn't want to transfer title at this time.

  • 17 years ago

    I would talk to a lawyer- just to be safe.

    Trish

  • 17 years ago

    Thanks everyone. I will be calling a lawyer soon. I need to bring my will up to date too.
    Leslie

  • 17 years ago

    My FIL although a blue collar worker always had rental property around town. He also bought 80 acre parcel of land on a lake a half an hour away from the city.

    There were 8 children in the family and he collected money from them to pay for the land. I think my husband complained that he paid ten bucks a month! My FIL kept careful track of the payments and who quit paying and took their cash etc. etc. Nothing was legal, except the document that listed FIL as the owner. As time went on only four of the boys, my husband included "owned" the land.

    Fast forward: when my FIL was about 75 years old he decided to sell the land. Imagine our surprise when it brought in over a half a million dollars, cash from a developer. FIL took responsibility for the taxes and gave the four sons and the sons wives "gifts" of 11,000 dollars each (the most IRS allows). We received those "gifts" until he figured we were even. The other siblings just had to accept the fact that they cashed out for whatever reason. We had a second parcel of land too, but that story is even longer. DH and I and only one other married sibling were left in that deal and we now own a beautiful piece of acreage on a lake bought and paid for in full.

    If anyone reading this thinks FIL was "mean" for not splitting the land equally between all eight kids I have to explain that he taught his kids a valuable lesson about investing. He made the initial down payment and the kids carried the payment.

    Bottom line, it would be best if your mother made some decisions NOW while she is of sound mind and body. My FIL is alive but only in body, sadly. He took a turn for the worse about two years after the sale of the land. I don't see what anyone would have to gain by her waiting. Also, it's very sad that a young man drowned but how could a drowning death (in a river) be blamed on a property owner (solid ground????)

  • 17 years ago

    That was an example of something that could happen. Or maybe a tree limb would fall. Any reason. I think you were entitled to your money. You made the payments. I know your piece of the lake property. Are you going to build on it?
    Leslie

  • 17 years ago

    Actually, in some states, you escape the inheirtance tax if the land is 'given' to you while the gantor is still living. It is consider a gift rather than inheirtance. However, for it to be a legal gift, the property must be deeded to the receiver, otherwise, it is hear-say.

    Some farmers in Wisconsin have passsed their farms to a child or children by gifting before they passed away, othrewize the tax is so great that a child could not afford to inherit and is force to sell to pay the tax bill. You have to trust you child/children very much to do this, but there is some protection if a trust is set up. Essentially, the owner gifts the land and property to his children with the proviso that he may occupy the property until he dies. Sometimes he gives the land and reserves a house and lot for himself until he dies. In any event, it is critical to have a written will to spell out clearly the disposition of your property, and to avoid disputes later.

    In wording a will, contingencies should be addressed, for example:
    1. What happens if both husband and wife are killed at the same time?
    2. What happens when one spouse dies and the other lives on?
    3. What happens if one spouse remains, but becomes mentally incapacitated?
    4. What happens if a grantee dies before the grantor does?

    Along with this, a living will should be made with instructions on what to do if a parent falls ill with no hope of recovery, but can be kept breathing with machinery. Without a written instruction on this matter, health care providers are bound to maintain the body as long as possible even when the brain is dead. In that case, the estate gets gobbled up in costs with no return.

    Laws vary from state to state. Consult an attourney. His services for these matters are valuable.

  • 17 years ago

    Have your lawyer check into having land put into a revocable trust. My in-laws did that with their home and assets before they passed.

  • 17 years ago

    You definitely need a lawyer to advise you about what the laws are in your jurisdiction, and how this can best be achieved.

    Understand, though, that it can be very, very expensive to subdivide a piece of property. My neighbor has a bit of land on a river (your story sounds a lot like hers, btw)--5 acres--that she got from her grandmother. In order to build, she needs to sell off a bit of property. Last I heard the LEGAL fees just for subdividing that property were up to $10,000!!! So you and your mom do need to find out everything up front.

    Aside from the legal aspects, however, let me just say this. I am NOT a big fan of our older relatives giving away their assets before they die, to reduce their heirs tax liability. Usually, there's not that much tax--unless the person is extremely wealthy (we paid no inheritance tax on my mom's estate). And no one knows what the future holds. It may be that one day, Mom will need the money she could get from selling that property. My aunt is in an assisted living facility--the bills are over $4000 PER MONTH--we're liquidationg all she has, and hoping it will be enough to get her through until Medicaid will kick in. But there's absolutely no other choice for us--she needs round the clock supervision, and that was one of the least expensive options in our area. So please, encourage your mom to hang on to her property, just in case. It will be soon enough for you to get it when she no longer needs it.

    It's also a bit ghoulish to me, to be trying collecting one's inheritance when the deceased isn't yet deceased, if you get my drift. If you care about mom, help her organize her affairs so that when the time comes, her estate will be divided fairly and with as little fuss as possible. That is important, but speaking for myself--I don't want anyone's goods or money until they have no possible use for them. And I've told all my relatives to spend all their money on themselves, and enjoy doing it.

  • 17 years ago

    I'm not trying to collect on anything. I just don't want to have to pay boo koo taxes when it does happen if there's something I can do to keep from it.
    Another part of the property which I haven't mentioned is the farm part. When my grampa died, gramma inherited it. She had to pay an outrageous amount of taxes. She lived and farmed it right along side of him all those years. It should have just been passed on to her as the spouse. They'd just set the farm up as a coorporation, but it had to be in effect for 3 years before he died, a year later. If she'd have known this law or whatever it's called they'd have done it earlier.
    "If I care about my mom" That's just asinine. What do you think I am doing? My 2 sisters and I went with her to her lawyer to get her will and DNR set up. Everything will go to us to be divided equally. I was just asking if there was some little thing to be done to keep from having to pay any inheritance on it that is being missed.

  • 17 years ago

    Oprah had an author on her show, years ago, who wrote a book about distributing the inheritence before you die. One nice thing in particular was that you got to give the gift while you were alive. In my FIL's case he knew that he settled a major part of his affair so the 8 siblings wouldn't be fighting after his death and there wouldn't be any questions about what Dad wanted. It was settled, never to be in probate.

    If it seems a big "ghoulish" to you, perhaps you're not used to thinking outside the box. There are different ways to do things other than what everybody else has done. And it certainly doesn't mean that we love him any the less!

  • 17 years ago

    After seeing all these opinions, I'd talk to a good lawyer.

  • 17 years ago

    I was given acres divided from the family farm, as each of my siblings were also given (one has, the other hasn't yet). I think the "gift" tax will be paid from the estate after death. One really important caveat is that we all have a right of first refusal if one of us decides to sell. Dad always gets the first right, then we each have a second right. The deal is written that the amount to be paid is the cost of improvement, not the value of the property. It pretty much limits our ability to make a profit, unless the other siblings agree or just can't afford it.

  • 17 years ago

    Nycefarm, that is included in the Corporation bylaws on the farm property. The ground I'm talking about is mom's personal land, seperate from the farm corporation.
    Was this ground already deeded to you? If so, and this is my question, how was it done?

  • 17 years ago

    Yes, the land was deeded. We first surveyed and did a subdivision of the land, hired a RE attorney, who then wrote and filed the new deed. Pretty sure we had to have an appraisal done also. Not sure what the accountant had to do... The deed had language that indicated something to the effect of "in consideration for the love and care" don't remember the actual verbiage, no money changed hands.

  • 17 years ago

    Thank you nyce. That is what I was looking for. I had planned on getting an attorney, and figured we'd need it surveyed, ect.
    I asked mom earlier, when we went and got groceries, how gramma did it when they were given the property. She said gramma sold it to her for $1.00. (I'm sure mom has some paperwork in her files about it.) We could probably add the "in consideration for the love and care" verbiage in a contract or whatever needs to be drawn up.
    Leslie

  • 17 years ago

    You do need the services of an attorney.

    I'll just add one more thing: If you receive title to the land now, the original value of the property stands. (That's whatever was paid for it or however it was valued for tax purposes when the last owner died.) However, if you inherit it after the owner's death, the land gets a 'stepped-up' value -- an appraisal of its worth at the time you inherit it. Someday you may want to sell this property. Then you will owe capital gains taxes on the profit.

    My mother put a rental property she owned into a revocable trust with me as successor trustee. When she died (30 years ago) the property was appraised and the estate paid capital gains on the difference between the appraised value and what she'd paid for it.

    I directed the trust to sell that property and buy another rental property, rolling over the funds tax-free by using the 1031 regulation in federal tax law. Now this property is worth ten times the appraisal from 30 years ago. That's a hefty paper profit -- and potential capital gains tax. But the tax would be even higher if based on the original purchase price 50 years ago. (Of course there's no tax to be paid until/if we sell.)

    BTW, the trust my mother created paid taxes when she died and the trust passed to me. It will not pay taxes when I die and the trust passes to my husband, and then to our son. (I plan to let DS take the hit on the capital gains -- if he wants to sell! LOL)

  • 17 years ago

    chisue, that's kinda what I plan on doing too. It will go to my 4 girls. But, it'll be up to me to state that in my will. I have no husband, so I don't have to worry about whatever I have being left to my spouse. It'll go directly to them.
    Leslie

  • 17 years ago

    Grammahony, you said "She said gramma sold it to her for $1.00. (I'm sure mom has some paperwork in her files about it.)"

    Get ANY papers together now and please please get an attorney soon. Over the years, I've seen so often how these things can get completely out of hand because there was no filed/recorded documentation of property transfers, and death seems to bring out the very worst in some people.

    Laws and personal situations are so variable, you need to get it sorted out as it pertains to you and your family, and the state where the property is located.

  • 17 years ago

    Leslie, it could save taxes for your mother to create revocable trusts naming her daughters and grandchildren. That way the estate will pay taxes upon her death, but not when the daughters die and the trust passes to the grandchildren. Everyone still needs a will, but a trust can be a useful instrument too.

    You could look up the property in question at the county assessor's office to follow changes in deed over the years. Who's getting the tax bills on the property now?