Legal Question in Real Estate Law in California

Re: Can a Quitclaim be stopped? IRS still be able to lien?

A Quitclaim Deed is a deed which transfers ownership of real property from one person to another. If one of the siblings is "quitclaiming" her interest in real property (real estate) to another person, the remaining siblings cannot prevent that, since anyone who owns property is free to gift it to whomever they wish.

However, in the context of your question, you may be talking about a "disclaimer" of a portion of your mother's estate, which may include personal property as well as real property. A disclaimer may be filed with the court by one of the siblings, which would have the effect of telling the court that she does not want to own her share of the property of the estate.

If the sibling is quitclaiming real property to someone, the remaining siblings will be co-owners of the real property with that person. If the sibling is filing a disclaimer of her portion of the estate, her portion will be split up between the remaining beneficiaries of the estate.

Re: Can a Quitclaim be stopped? IRS still be able to lien?

You might be better off asking this question under a LawGuru heading relating to trusts, estates or probate matters than under the real estate heading. Even though it concerns real property, the essence of it has to do with the taxation of estates, I think.

In any case, here's an attempt at an answer.

An heir, like your sister, can reject (techincally, "disclaim") a testamentary gift, whether received by will or by trust. Why would an heir disclaim a gift? Among the possible reasons: (a) it might be a piece of real estate with environmental liabilities attached to it. (b) it might be stock in a family business where there are no profits and no market for the stock, but lots of management headaches. And so on. Often, heirs refuse gifts for tax reasons, too.

However, in my opinion, if the sister deeds away the property (whether by quitclaim or any other kind of deed or instrument where she is the grantor), she will be treated by the IRS as though she inherited the property and then immediately disposed of it; i.e. she will NOT have accomplished her apparent purpose of disclaiming and thus never having owned the 1/4 interest.

Rather than deed away the 1/4 interest, the sister must take positive steps to refuse to inherit the property. Disclaimer must usually be accomplished within nine months of the time the interest arises.

There are statutory requirements to disclaim gifts; see Probate Code sections 260 through 295, especially sections 275, 278, 279 and 280. The disclaimer must be in writing, identify the donor, the disclaiming party, and the gift being disclaimed. The disclaimer must be filed with a superior court, the trustee, a person with custody of the gift, etc. (see 280).

A disclaimed gift is thereafter treated as though the intended heir had predeceased the testator, i.e. it goes back into the estate and (generally) gets redistributed as part of the residuum (the part of an estate not specifically given to a particular heir). Possibly then the other three siblings would end up with 1/3 each.

If the sister fails to disclaim, but instead in effect accepts the gift by giving someone a deed to it, she'll be treated as having accepted it and all the tax consequences of that will automatically ensue.

The other three siblings don't have any obvious way to "stop" sister from deeding away her property. It's only a 1/4 interest, of course, but it's freely marketable. You could end up with a nuisance co-owner and may have to sue for partition.

Yes the IRS can pursue a lien on sister's 1/4 interest (if the buyer or donee is in cahoots with her in any way, or it even looks suspicious) and/or any money she receives from selling it. The other 3/4 should be safe.