Legal Question in Real Estate Law in California

Re: Gift tax

Did your mother actually transfer the property title/deed to your sister? If it was for 13 years of hard work, it was not really a gift. Your mother would not have t pay gift tax because the value of the house would be deducted from her death tax sum, which now is $1,000,000. She could reject the gift if it were made not too long ago, but why should she? She worked hard for it and it seems your brothers just want to take a piece of it because they are also children of your mother. Since you are in the Bay Area, the house is probably worth at least several thousands. She would not effectively pay any gift tax and the house would get a stepped up basis to its fair market value at the time of your mother's death; if the estate is worth less than $1,000,000 there would be no death/estate tax, but if all the assets aside from the house are worth less than $100,000 the estate does not have to be probated, which would save tens of thousands of dollars, time, and a large amount of headaches and hard feelings.

I would think she should keep the house [if it is her primary residence for 2 of the last 5 years, when she sells it she can deduct the first $250,000 of profit from her taxable gain]. Until it is changed, which might occur, long term capital gains tax is a flat 15% [although yo might get tossed into the minimum tax provisions] which is about the cheapest tax rate. The brothers have to prove to her why she should give up that large sum of money and she should have the backbone not to cave in, as her relationship with them will not change no matter what she does [is she caves in, they will have no respect and will likely take advantage of her in the future, as I suspect then did with the taking care of their mother]