Legal Question in Wills and Trusts in California

Re: Inheritance Law/Tax

California does not have an inheritance tax anymore--it does take a portion of federal estate taxes, though. Estate taxes are due for estates worth $675,000 or more (this figure is lower if your grandfather made lifetime gifts). If there are estate taxes in your case, they are due within 9 months of the date of death, unless you file for an extension.

Even if estate taxes are not due, you should still file probate (or administer the trust) now to get the house in your name. This is because: the will must be filed within 30 days of the date of death, creditor's claims will be cut off earlier, certain notices must be given within certain time frames, the house will be appraised and the value fixed (which will help in calculating capital gains later), and you can apply for the grandparent-grandchild property tax reassessment exclusion (if it applies in your case).

Your next steps will depend on the value of the house and whether there is a will or trust (or no will or trust), so consult an attorney (the consultation will probably have little or no cost) to determine what those next steps are.

Re: Inheritance Law/Tax

depending on the value of the home, there may be no tax at all.

Re: Inheritance Law/Tax

Inheritance (estate) taxes are generally misunderstood. There may be no taxes, depending on the overall size of the estate. Also, capital gains taxes are avoided, because of the stepped up basis of the property.

Re: Inheritance Law/Tax

To answer your question directly, you need to think about two separate tax systems. First, the estate tax, if any, falls due nine months after the date of death. You can file for a six month extension, but the government usually grants the extension of time to file, but still requires that you pay the tax in nine months. When you sell the property is irrelevant.

Capital gains tax, on the other hand, is only triggered when you sell the property. Normally, to calculate a gain you subtract the sales price from what you paid for the property. However, if a person dies, the amount you subtract is the fair market value at the date of death.

It sounds like you have a situation where you really need to talk to your lawyer or an accountant. You face some pretty inflexible deadlines, and you want to comply with the law.