ArcaMax

Q: I am one of four siblings whose mother passed away last year. She had a will. In it, she left an equal share of her house and all other financial assets to her children, all four of us.

For a variety of reasons, I’m not interested in receiving my one-quarter share in the house. I’d prefer to allow my share to pass to my youngest brother. I also do not wish to receive an offsetting increase in the financial assets to account for ceding a one-quarter interest in the house.

My oldest brother wishes to do likewise, while a third brother wishes to allow the house deed to transfer to the youngest brother but wishes to receive an offsetting increased share in the financials assets to account for ceding his one-quarter interest in the house.

My question: Is there a simple and direct way (under New York law) for me and my one brother to cede our shares in the house? We would like to allow our shares to pass to our youngest brother under the will without creating a taxable event.

Presumably, the preferred course of my third brother would require a different transaction, since he wants to be compensated for his share of the property by an increase of equivalent value in his share of the financial assets in the estate.

Can you please advise how we might best proceed to accomplish these objectives and avoid any taxable transfers of assets outside the will. Thank you.

A: Just because someone names you as an heir, that doesn’t mean you have to accept the bequest. Your mother may have named all of her children equally, but if you reject the inheritance (more on how to do that momentarily), your share of the inheritance will end up back in the pot, to be divided among the other named heirs.

So, if you and your brother reject your bequests, then your two remaining siblings will divide the inheritance — the entire inheritance — between them. For the logistics of how to do this you’ll want to talk to an estate attorney in the state of New York.

Let’s say that your mother’s house is worth $500,000 and her assets are worth another $500,000. So, her estate is valued at $1 million, with you and your three brothers each getting $250,000. If you and your one brother opt out completely, then your remaining two brothers will share the entire estate equally and receive $500,000 each.

Between them, and before the estate closes, they can trade their share of the house for a share of the financial assets or cash. So, if your brothers each get a share of the property worth $250,000, and they divide the $500,000 in cash, then one brother can take the house and the other can take the cash. The estate can, through probate, deed the property to the one brother, and retitle the financial assets in the name of your other brother.

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