Administrator of Parents Home (sale, real estate, loan)

[firewall6969]

Hi; I am in the process of selling my parents home (no will) I am the Administrator of the Estate. Total worth is under 200,000. My brother and I are the only ones involved and agree on everything. As an example if I sell the house for 100,000 and deposit the entire check into his account as i owe him 50,000 would that be considered a gift. I am under the impression that under NY state law we are entitled to 50%ea so not really a gift but legally what is ours. I am not trying to avoid any taxes as the Estate is well under the 500,000 or 1 Million dollar amounts. Any help would be appreciated.

[bmwguydc]

I do not believe that would not be considered a gift, as you are repaying a loan with your proceeds from the estate. You each will inherit 50% under NYS law, though the administrator can be entitled to extra fees. Your inheritance would not be taxed, nor would his. However, for ease of accounting, you might want to write two separate checks for the amount, since you're the administrator of the estate and the funds would be given to you in the name of the estate. You would then deposit the proceeds into your account, write him a check for his share, noting it on the memo line. Then, write a second check to repay the balance of the loan, noting that on the memo line as well.

I would double-check that method with your probate attorney, but I do believe you would have the checks made out in your name as administrator of the estate, so you would not have the amount directly deposited into your brother's account. Checks are also their own receipts, so you would have fulfilled your obligations to the estate with a record of both transactions. This would be with net proceeds, since final tax returns and property tax would need to be paid from the estate.

This is what I recall what happened with a member of my own family who had to deal with an estate for a sibling with no children or heirs, other than two surviving siblings. They agreed as you did that an equitable distribution was appropriate, as the will that had been drafted had never been executed. Luckily the real estate was owned jointly with one sibling, so that made for ease of transfer, especially since that house had been a family home that the surviving joint owner wanted to keep. Most of their dealings were in Manhattan and Westchester, with attorneys in Westchester who handled the entire estate.

On another note, I am very sorry for your loss, and wish for you to have a very easy time going through this process.

[PullingHairs]

Originally Posted by firewall6969

Hi; I am in the process of selling my parents home (no will) I am the Administrator of the Estate. Total worth is under 200,000. My brother and I are the only ones involved and agree on everything. As an example if I sell the house for 100,000 and deposit the entire check into his account as i owe him 50,000 would that be considered a gift. I am under the impression that under NY state law we are entitled to 50%ea so not really a gift but legally what is ours. I am not trying to avoid any taxes as the Estate is well under the 500,000 or 1 Million dollar amounts. Any help would be appreciated.

First, may I ask where in Westchester the property is located? (Just curious because it's pretty cheap for the area).

Having gone through a similar process, here is my understanding (although you should consult an attorney):

The proceeds of the sale will go to the estate, not you individually. If you want to do it the "right way", the Administrator would open up an estate account with their bank. The proceeds of the sale would be deposited into the estate account, and as administrator, you would then draft a check against the estate account to your brother in whatever amount he's entitled to, and then to your personal account for the remaining balance. Opening an estate account may require that you provide the bank with a court order appointing you as administrator. Because the estate is uncontested, getting an appointment order may be as easy as going to your local family court/county office and filling out the required paperwork.

As for taxes, the sale will be reported as will any net proceeds you receive from the estate account, but given the low estate value, I don't think you'll be presented with any complex tax issues that couldn't be handled by a good tax software like Turbo Tax.

Best piece of advice, though: People are often in a rush to sell inherited properties because they want to get everything done and over with. As a result, they often sell below market value, or make silly decisions that wind up reducing their profit. Do your homework and use a broker that treats the transaction as if were an ordinary sale, and not some quick and dirty transaction.