Q: How does life estate work with 50% undivided interest, both life estate tenants in common are deceased.
The home was purchased in 6/95. The deed states "a single woman, as to an undivided 50% interest with Life Estate to **** and same for a single man as to an undivided 50% interest with Life Estate to ****, tenants in common." There are two beneficiaries of the tenant that died in 1996 and there are three beneficiaries of the tenant that died a few months ago. The previous attorney (also deceased), had mentioned that the two beneficiaries are entitled to the property's value when their decedent passed, not the current market value. Is there any truth to this?
A: The two heirs of the single woman inherit her 50% of the property. The three heirs of the single man inherit his 50% of the property. Probate will be required for the man and woman for their heirs to take their portions of the property. The previous attorney was probably referring to the tax basis in the property and not the value that the heirs are entitled to. The tax basis of the property as it relates to capital gains tax is set at the death of the owner. If the two heirs of the woman who died in 1996 sold the property now, they would owe taxes on the difference between the value in 1996 when the woman died and the amount of the current sale. Schedule a free consultation to ensure the property is passed on to the heirs in compliance with the appropriate probate laws.
Terrence H Thorgaard agrees with this answer
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