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As to whether the fee is "normal" fees are all over the place. If I was still in public practice, I would be charging $400 an hour. 3.75 hours might be a bit steep for this, not sure. Flat fee type arrangements are usually a bit higher because sometimes it takes longer than expected, so you pay for the risk with a flat fee deal.
When property is inherited, the basis of that property is adjusted to fair market value as of the date of death. Since real estate generally appreciates, the process is called a “step up” in basis.
This is potentially a very big deal. For example, if your parents bought a home in San Diego in 1968 for $30,000 and they pass away in 2018 when the property is worth $1.5 million, you inherit the house, and its basis is “stepped up” to $1.5 million. If you then immediately sell it for $1.5 million, you would have no capital gain. However, if your elderly parent simply added you to the title of property, to “make it easier” for you to eventually get it, you wouldn’t get the step up in basis upon their death. If you were then to sell the house for $1.5 million, you would have a $1,470,000 gain that you would have to pay taxes on.
OP never once asked for legal advice, people started offering it on their own. OP asked if $1500 was a normal rate for a lawyer to do this, that's it, and whether there are more affordable options since they can't afford that fee.
The OP wants a lawyer to do it for free, even though they have the money. Grandma simply needs to tap into the equity on the home.
Quote:
Originally Posted by Luvvarkansas
And yes, Grandma DID initiate the whole process because the woman who mops her floors informed her that the grandkids owned part of her house now!
And without an attorney guiding you, you have little to recourse to change that.
When property is inherited, the basis of that property is adjusted to fair market value as of the date of death. Since real estate generally appreciates, the process is called a “step up” in basis.
This is potentially a very big deal. For example, if your parents bought a home in San Diego in 1968 for $30,000 and they pass away in 2018 when the property is worth $1.5 million, you inherit the house, and its basis is “stepped up” to $1.5 million. If you then immediately sell it for $1.5 million, you would have no capital gain. However, if your elderly parent simply added you to the title of property, to “make it easier” for you to eventually get it, you wouldn’t get the step up in basis upon their death. If you were then to sell the house for $1.5 million, you would have a $1,470,000 gain that you would have to pay taxes on.
This is why I think it's usually best to inherit a house, rather than to be added to the title. I asked my husband long ago not to be added to his parents' house title for this very reason.
This is why I think it's usually best to inherit a house, rather than to be added to the title. I asked my husband long ago not to be added to his parents' house title for this very reason.
Isn't that backwards? Being on the title would avoid the 'step-up' thing.
Yeah, Arkansas laws suck. I assume that the original purchase of the home wasn't done such that it was in her name as well and setup so she had right to survivorship. Make sure you have a will, that when you purchase property it is in both your names with right to survivorship. The law in Arkansas really does a number on spouses (usually females) and I think the inheritance is 1/3 to spouse and 2/3 to children not 50% 50% from what I am seeing though maybe that has changed.
Let's get past fractions and start talking dollars here and see what makes sense given the information we have.
I also read the law as passing 1/3 of the house (and the rest of the estate) to the surviving spouse and 2/3 to the surviving children. Assuming that the two brothers have no other siblings they would each have inherited a third of Grandpa's estate. On the death of one son, barring a spouse, his interest in the house (and whatever cash existed) would have been split equally among his children. With two sons and one daughter they would each own 1/9 of the property. So the scorecard would be Grandma: 1/3, Surviving son: 1/3, Nephew 1: 1/3, Nephew 2: 1/3, Niece: 1/3. If the niece ceded her share to her brothers she would be out and they would each own 1/6 of the property. Their lifestyle or place of residence does not matter.
The OP keeps saying there is very little value in the property so let's just guess at $60,000 to make things easy doing the math. Grandma's current value is $20,000 as is that of the OP's husband. Each of the dead brother's children own $6667 unless the niece did give up her share which would leave her brothers each holding $10,000.
Even if the house is only worth half that, it would be a minimum of $3333 for each nephew and niece. Plus whatever cash exists, although that should have been distributed when the grandfather died and before the first son died.
The OP paints a picture of a hardscrabble existence for all of them and I don't see the extended family depriving themselves of the chance to have even a small portion of the estate to which they are entitled by law regardless of the machinations of their uncle and his opinionated, possibly meddling wife. A lawyer getting involved in this situation may very well quickly eat up all the cash involved (a few thousand, I believe) and getting a piece of the house before any resolution is found. The status quo may very well prove to leave the most for all involved.
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