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John Elder
John Elder, Estate & Elder Law
Category: Estate Law
Satisfied Customers: 4631
Experience:  Over 14 years experience in Medicaid, Estates, Trust.
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My wifes father recently passed away leaving a $50K house and

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My wifes father recently passed away leaving a $50K house and $100K in farm land and 50K in cash. The will was a hand written disaster (not notarized with two witnesses signatures, leaving the personal property and cash to son #1 with no mention of the land and house in the will) and the North Carolina probate attorney said that the way the will would have to be handled was that my wifes brother (Son#1) got the 50K in cash and the house and farm would be split three ways between my wife and her two brothers (son #1 & 2) (Son #2 is permanently disabled and living in the house with the other brother). Being the kind fools that my wife and I are, we decided to have my wife sign over her 1/3rd of the land (about $33K) to her brother (son #1)"the executor" so he could use it to take care of the disabled other brother over the years. We set up a survivorship between the two brothers who now live alone in the house, each one to receive the others share if one of them dies.

Do we have to pay a gift tax on that 33K in land that we transferred over to the executor on IRS form 709? I read something about a $14K exclusion in 2013 on gifts. We had no idea we might have to pay any taxes on a gift like this.
Welcome! Thank you for your question.

While there are much safer ways to protect your disabled brother, like using a trust, gift tax is not an issue here.

There is a $13,000 annual exclusion for each person that you give gifts. Any amount that your wife gives away above $13,000 must be reported on a 709 form. However, you and your wife each have lifetime gift and estate tax exemptions of $5.124 million dollars. While the gift is reportable, it will reduce her lifetime exemption by $20,000 to approximately $5.104 million dollars in lifetime exemption left. It is not until she gives or leaves to heirs more than $5.104 million dollars above the annual exclusion amounts that she will have to pay gift or estate tax.

Also, there is not a North Carolina gift tax.

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Customer: replied 4 years ago.

The probate lawyer strongly suggested the survivorship to protect the disabled brother (son #2) from them coming after him for his 1/3rd of the property to pay disability he had received in the past.

Do you think a trust would have been a wiser choice to protect the disabled son in some way?


Probably not much we can do about it now???????



There is nothing you can do now because the disabled brother cannot now transfer his property out of his name without causing issues with his benefits. The joint with right of survivorship works well so long as the healthy brother out lives the disabled brother. A trust would have been a bit more expensive but would have protected the interest in the property for the disabled brother without the possibility that the healthy brother dies first.


Overall the plan your family ended up with is not that bad.



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