My grandmother recently passed and left her Florida home, which is in an irrevocable trust, to my 2 brothers and I. I live in Virginia, and will receive 1/3rd of the proceeds when the home is sold. There is no probate process due to the irrevocable trust. The attorney facilitating the trust in FL stated there are two ways to sell the home: 1) Have the trust sell it, proceeds will disperse to the trust and then be split among us, less any fees. Or 2) Have the deed of the home transferred to our names, then sell the home directly.
With the home in FL and me in VA, are either of these scenarios a taxable event? and if so on what level?
You will need to ask this question to the attorney facilitating the trust. The only significant taxes possibly due would be capital gains taxes. However, hopefully your grandmother's trust, though irrevocable, was drafted in such a way that the house, upon her death, received a full step-up in basis for capital gains purposes under IRS Code Section 2036 or 2038, meaning that if it's being sold for the fair market value as of the date of her death, then there will be no capital gains taxes. Of course there will be standard recording taxes, transfer taxes, etc., in connection with the sale as there are with any property sale.
Evan Farr is Certified as an Elder Law Attorney by NELF (National Elder Law Foundation), which is approved by the American Bar Association, and is a member of the Council of Advanced Practitioners of NAELA (National Academy of Elder Law Attorneys). Evan is licensed to practice law and has offices in Virginia, DC and Maryland. NOTICE - Unless expressly stated otherwise, this communication: (1) is not legal advice absent an existing attorney-client relationship between us; (2) does not create an attorney-client relationship; (3) does not constitute an offer, acceptance, or contract amendment; (4) may contain confidential or legally privileged information protected by the attorney-client relationship and/or work product privilege; (5) is only for the use of the individual to whom it is intended by the sender to be sent, and if you are not such recipient, disclosure, copying, distribution or reliance upon this communication is prohibited; and (6) is not intended, and cannot be used, to avoid tax-related penalties pursuant to treasury department circular 230.
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