Legal Question in Wills and Trusts in Indiana
Capital Gains Tax Basis
THE WILL (1983): I give all real estate for their natural lifetimes only, to [my father] and [my aunt].
One half of the fee simple title of real estate, I hereby devise to dad's kids (3) and one half of the fee simple title of real estate,I hereby devise to aunt's kids (3).
FINAL REPORT:The decedent died the owner. (1)[father] should receive a life estate in an undivided one-half; (2)[aunt] should receive a life estate in an undivided one half;(3) six grandchildren should each receive undivided one-sixth subject to the respective life estates of [father] and [aunt].
Vested (1)an undivided one-half interest in decedents real estate to [father] for and during his natural life only, and upon his death and subject to said life estate unto six grandchildren as tenants in common; (2) an undivided one-half interest in and to decedents real estate to [aunt] (same terms)
Aunt died 2002. Her part went to 3 cousins. Father died 2005, his portion of the farm passed to my brothers and me.
Question: Is that what the will stipulated?
1 Answer from Attorneys
Re: Capital Gains Tax Basis
Your question does not pose a capital gains issue, except by inference. I take it from the data you provided that your grandmother left some real property to your father and his sister as life tenants, with the remainder to your father's children and his sister's children. The situation you described in the final order and distribution seems to be consistent with your description of the will. As to a possible capital gain inference: there won't be any capital gain unless the property is sold (basically). Then the basis will be the date of death value of the interest sold. Valuation of life estates and remainder interests and partial interests is subject to a fair degree of Scientific Wild Ass Guessing, something best left to professionals. Your local tax professional (and I recommend you consult a CPA or tax attorney) can put you in touch with a professional appraiser who will know what to do. Good luck.
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