When your parents deeded the house to your sister, they removed it from their estate, so whatever they said (or didn't say) about the house in their will won't make any difference. Unless you can come up with proof that your parents were fraudulently induced to sign the deed over to your sister, my judgment is that there isn't much you can do about the situation now.
In response to your question about the proposed bargain sale to your niece, of course you can contest it. Anyone who can find a willing lawyer and pay a filing fee can contest anything they want. I believe, however, that your real question (which is the one I teach all my clients) is, "If I were to contest the action in Court, am I likely to win?" My judgment, most respectfully, is that you are unlikely to win. Of course, my brethren and sistren here on Avvo will advise you if they think I am wrong, as they should, but it's always good to get a second opinion anyway.
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Attorney Masiuk has highlighted some of the challenges, and I would not say that he is wrong. I think you have a real uphill battle on your hands. Contesting the deed may be possible, but the grounds are 1) lack of capacity, 2) undue influence and perhaps 3) mistake. If there is enough evidence that your parents intended for the siblings to all share in the property, then perhaps you can overturn this. But it would have been just as simple for them to add all of you to the title, initially. The deed is the best evidence, at this point, that they intended it to go to your sister.
This is one more example of why it is so important for people to get lawyers to set up their estate planning, instead of trying to engage in self-help or homemade estate planning. They may have saved a couple hundred dollars by doing it this way. But from your perspective, they created a nightmare for all of their kids, but one.
If you can PROVE that your parents wanted all four of you to inherit, you need to meet with an attorney as soon as possible, to see what, if anything, can be done.
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Mr. Masiuk and Mr. Frederick give you good advice. There are things that I don't quite understand as to your parents' intentions at the time of the deed transfer: (1) How deeding the house to your sister, as opposed to all four of you, would have accomplished much of anything; (2) what taxes your parents were looking to avoid. A transfer on death would have accomplished a stepped-up basis so that no income taxes would be payable when the beneficiaries would sell the house (assuming that it would be sold at about the same amount as it was valued on the date of death). [It's impossible to evaluate whether estate taxes would have been due without knowing details of the estate].
If your parents' intention was indeed for all four of their children to inherit the house, they went about it completely the wrong way.
Unless there are additional facts (and there may well be additional facts), it does not sound as though any potential challenge will be successful. You would do well, however, to promptly consult with a local attorney.
Good luck to you.
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