Legal Question in Wills and Trusts in Ohio

Re: Father died sold home what about taxes?

It appears that one of both of your parents created a trust. A trust is used to avoid probate and not necessarily to avoid inheritance taxes. This depends. Transfering a house by deed is more like gifting the house. If it's a gift, it's not an inheritance and therefore taxable. You should consult with an attorney to fully understand what has happened.

Re: Father died sold home what about taxes?

It appears that one or both of your parents had a trust. When your father transferred the home to you and your sister it was considered to be a gift. When property is gifted, the person receiving the gift will also get that persons "basis" in the property. "Basis" is used to calculate capital gains for tax purposes when the property is sold. Your mom's basis would have been the purchase price. On her death, since the house was in her name alone,when your father received the property he may have received a "stepped-up basis" which would have been the fair market value on the date of your mother's death. You and your sister received this same "basis" in 2005 when you received the gift of the property. Since the home was in your names, when it was sold, you would be responsible for paying the tax on the difference between the sales price and your "basis" (less any adjustments).

You should look into the trust issue. Does your father know of any existence of a trust? If it was titled trustee, then there must have been a trust, or a big error. Gift tax issues should also be looked into.

All of the facts should be evaluated address all of these complex issues. There are several probate and income & estate tax concerns that should be addressed. Re-doing the closing will not change anything, the problem occurred when he made the gift. If your father wanted to avoid estate taxes, he should have kept the property in his name or the name of the trust, until his death.

Re: Father died sold home what about taxes?

I hope that you have already talked directly to an attorney about this question but I will add a little to what has already been posted.

One of the errors that people make as they approach the end of their life is transferring a home that they bought years ago to one of their kids.

Your dad deeded the house to your sister. Because this was a gift, her "basis" for deteriming profit on the sale of the house is the price that dad paid for the house. As an example, if dad bought the house for 10,000.00 and it was sold after his death for 160,000.00, the profit on the sale would be 150,000.00 and income tax may be payable on that profit. The fact that she did not sell the house until after dad died does not matter.

If the property had remained dad's until his death, the heirs would have a "basis" for income tax purposes of the fairmarket value of the property at the time of death. if the fair market value at death was 160,000 and the house was sold for 160,000, then there would be no profit on the sale and no tax due.

It would be a good idea to talk to an accountant to make sure that the tax issues are dealt with appropriately. If the house was titled in your sister's name when it was sold, she may have personal tax issues. The estate should not be involved.

Feel free to call and we can discuss this in more detail.

Good Luck!

DHD