Q: Mother passed. No will. Verbal wishes expressed to all four children that she desired all assets to be divided equally.
Assets are bank account approx. $175k which she named 2 dtrs as co-owners. 40 acres of farmland that also names these 2 dtrs on the title. All children are in agreement to divide evenly 4 ways. All agree to hold the land at the present time. It is currently being rented by a farmer. It yields $5k/yr. All final expenses are paid. How do we divide and distribute bank funds? How do we change the title on the land to include the 2 sons? 2 dtrs live in KS. 2 sons live out of state.
A: Your fidelity to fulfilling your mother's wishes is admirable. She would be proud. There are some details that are undefined that could be important to the proper method of implementing your mother's wishes and you should seek the advice of an attorney and a tax advisor.
If your mother gave those gifts to you by operation of a payable on death (POD) designation and/or a transfer on death (TOD) deed, then you and your sister become the owners. You may gift those assets to whoever you choose, with two caveats: If you are married (and a Kansas resident or have lived in Kansas during your marriage), your spouse must sign off on any transfer of the real estate. If you give more than $15,000 (of value) per beneficiary in any year, you must file an informational gift tax return. If your mother gave you those assets (made you joint owners) prior to her passing, her estate may be obligated to file an informational gift tax return. In addition to the caveats above, you should also be aware that the real property transferred during her life would have the basis for capital gains that your mother had when she owned the property.
It might be argued that if you truly are holding the assets in trust for your siblings, the transfers to your siblings are similar to a written trust that distributes estate assets at death; however, you should seek legal and tax counsel to discuss the specific circumstances that could affect how the IRS would view the transfers. You and your sister could each give the assets to your siblings shares of real estate or funds of not more than $15,000 per year (and if your spouses signed off on the gift, you could each give another $15,000 per year) and not incur the obligation to file an informational tax return.
Here is information from the IRS explaining gift tax return obligations: https://www.irs.gov/faqs/interest-dividends-other-types-of-income/gifts-inheritances
Here is an article about issues that relate to gifting siblings money received from a parent upon death: https://money.com/cash-gift-pay-tax/. The articles are both general in nature and do not constitute legal advice. You should rely upon your legal and tax counsel to make the best decisions for your personal circumstances.
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