Legal Question in Wills and Trusts in Alabama

Re: Inherited House

In your question, you don't mention how much your mom paid for the house, what her basis was in it, or its worth when she made the gift. You should definitely consult an accountant to help you with the tax issues you present, but in general, your mom could give up to $1 million in gifts during her lifetime, free from gift tax. Assuming the value of the house was less than that, you all should be ok there. Where you may run into a problem is with capital gains tax. For legal purposes, your mom conveyed the house to the children at the point the notarized deed was actually given to you. I'm not sure if the IRS will use this date or the date the deed was actually recorded for valuation purposes. Your basis in the house will be the basis on the date the IRS considers it received by you, and your gain will be any amount you received over your basis in the house.

Also, you don't mention if your mom directly conveyed the house to the children, or if she reserved a life estate for herself, conveying the remainder interest to you all. This will be another factor your accountant will need to take into consideration in evaluating your situation. AGain, the best advice I can give you is to take a copy of the deed, a copy of any appraisal that was done on the house, a copy of the settlement statement you received at closing and any records you have on items you all paid toward the house and/or your mom's medical care to an accountant. He or she can help you sort out your situation. Good luck!

Re: Inherited House

Avoiding probate it Alabama will save you about $125 or so. People who fall for that old scare tactic about "avoiding probate" invariably end up paying a lot more for the priviledge that it is probably worth. You didn't say where your aunt went to law school or when she passed the bar. It would have been worth it to seek a second opinion at the time rather than now. Nevertheless, you mention owing taxes. Are you referring to capital gains taxes? It doesn't sound as though gift tax is an issue here. Have you talked with an accountant? What was the basis in the home? What was its value at the time of her death? Did you have any offsets to the gain you are showing? These are questions that need to be answered. Yes, you can minimize your taxes, possibly even avoid them entirely, but this time please ask someone other than your aunt and consider even paying a small fee for a lawyer to give you some answers.