Buying out siblings for inherited home in CA

Not likely since there could be an exception that covers it. I would suggest that you have a lawyer review the trust documentation and speak with you as to how to structure a buyout with the suggestions you mentioned. I would suggest that you call an estate planning lawyer with experience in real estate. Rosemary Meagher-Leonard is in San Diego and is on . She does great work.

If the three of you are holding title as joint tenants, a transfer (quitclaim) of title from each of your brothers to you does not trigger a reappraisal. If the trustee transferred title to the three of you as tenants in common, then the three of you need to deed the property to the three of you as joint tenants and then the brothers can quitclaim to you without a reassessment. (Cal. Rev. & Tax Code 65) Richard A. Rodgers, Esq. (805) 230-2525 200 N. Westlake Blvd. Ste 201 Westlake Village, CA 91362 [email protected] www.sdresq.com

Q: My brothers now want me to buy them out. Will this change the tax basis? A: It could. Transfers between siblings do not typically qualify for an exclusion from reassessment under Prop 58. As Attorney Johns has indicated, you should meet with an experienced attorney in your area to discuss your options. Good luck!

I disagree with both Ms. Johns and Mr. Rodgers. First, you need to look at the trust to see if it permits "non-pro rata" transfers. If it does and there are other trust assets worth $1MM ($500K per brother) that can be distributed to your brothers, you might not be subject to reassessment. However, if the trust does not permit "non-pro rata" transfers and you buy out your brothers' interests, the State Board of Equalization takes the position that 2/3 of the property will be reassessed as a "sibling-to-sibling" transfer and only your 1/3 will be eligible for the parent-child exclusion. The only way around this might be if a third party (not you, not your siblings, and probably not your respective spouses) lends enough money to the trust to cash them out (so, assuming the house is the only trust asset, you would need to find someone to lend the trust approximately $333,333). You could then take the house as your share of the estate (subject to a $333,333 mortgage) and distribute half of the $333K to each of your siblings. You would be responsible for repaying the mortgage to the lender on whatever terms were negotiated. This needs to be done very carefully to avoid reassessment. I suggest you contact a knowledgeable estate planning lawyer about this.