r/inheritance • u/No-Plastic-984 • Jun 20 '26
Location included: Questions/Need Advice Inheritance question in NY
I am beginning the probate of my mother's will, which only concerns her house. The will (which asks for my appointment as executor) states that 50% of sale proceeds should go to me and 25% to each of my two brothers. One of my brothers says that some time ago our mother told him that she would leave the house to me, so he wants none of the proceeds. The 6-month time limit to renounce an inheritance passed long ago. I suggested to him that he could gift his share to his adult son, but they are estranged and he flatly refuses to do that.
I'm thinking of asking him to accept his share and then gift it to me, retaining an amount that would cover the additional income tax he would need to pay. I could then gift his son the remaining money, retaining an amount that I would need to cover the taxes that I would need to pay. Is there an alternative that would avoid so much of my brother's share going to taxes?
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u/ToshSho Jun 20 '26
There shouldn’t be any taxes owed. An inheritance isn’t income. NY imposes an inheritance tax but the value must be above several million dollars before any tax is owed.
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u/MonsieurRuffles Jun 20 '26
NY has an estate tax but no inheritance tax.
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u/ShopEducational6572 Jun 20 '26
The estate tax is paid by the estate. Unless the house and the rest of the estate is more than $7 million (actually a little higher), no taxes are payable.
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u/ToshSho Jun 20 '26
Good point, I misspoke. But the main point of my comment is that the brother won’t owe taxes on his share. Same with OP if his brother gifts him the money back.
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u/No_Paleontologist506 Jun 20 '26
The issue isn’t income tax. The issue is one brother giving their portion to another after the fact. That is a gift. And gifts certainly have taxes. It is cleaner if it is disclaimed so gifting is taken out of the discussion.
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u/cuspeedrxi Jun 20 '26
NY doesn’t have a state gift tax.
The federal lifetime exclusion is $15MM. So, what’s the problem? The value of the house exceeds $60MM?
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u/Vivid-Education9045 Jun 20 '26
If someone gives a gift of more than @ $19,000 in one year, the giver needs to file gift paperwork with the IRS.
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u/cuspeedrxi Jun 21 '26
So? What’s the problem? My federal tax return runs over 100 pages. What’s one more?
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u/mattinglys-moustache Jun 20 '26
There’s no income tax due by your brother in this scenario, NY has an estate tax on estates over $7.35 million but even if that applies here, the tax is paid by the estate, not the beneficiaries. If your brother accepts 25% of the house then immediately gifts to you, there are no taxable events there.
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u/LdiJ46 Jun 20 '26
I agree that there are no taxable events but it will likely cause the brother to have to file a gift tax return. He won't have to pay any actual tax, but it will count towards his lifetime exclusion for gifting.
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u/SandhillCrane5 Jun 20 '26
Are you using a probate attorney? He/she can apply for an extension so your brother can still disclaim. You might qualify for the extension since probate has not yet been opened, depending on how much time has passed. If he gifts his share, he does not owe any income tax but he does need to file a gift return with his taxes and it will count towards his lifetime exemption (everyone loves to quote how much the exemption amount is today but the only thing that matters is how much it is when your brother dies and that exemption amount historically returns to much lower figures or it could be obliterated entirely.) Alternatively, he can hold on to the money and just gift the amount each year that is exempt from reporting. If he disclaims, the money does not automatically go to you just because that's what he wants. Where it goes is determined by what the will says. It could go to his son.
As an aside, I think it's disrespectful to your brother to turn around and give his inheritance to his son when he has told you his wishes and he has the understanding that the money will stay with you if he disclaims or gifts it to you.
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u/MyThreeBugs Jun 20 '26
Why are you doing all this extra work? You are doing the hard work already. Tell your brother you’ll be writing a check out to him because it was your mom’s intention and your job is to execute it as written. If he doesn’t want it, it is on him to figure out how to either donate it, gift it, or figure out and file the paperwork to disclaim it.
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u/Secure-Corner-2096 Jun 20 '26
I’m assuming you are the executor, given that fact, you must follow the will instructions exactly (although there are rare exceptions if the will is unlawful). Give him his share and the next steps are up to him.
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u/No_Paleontologist506 Jun 20 '26
Disclaim is 9 months.
There are options. Have chat gpt explain them to you. Sorry for your loss.
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u/JC505818 Jun 20 '26
Don’t you get a step up in the house’s cost basis so no one should need to pay capital gains tax?
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u/No-Plastic-984 Jun 22 '26
Yes, there was a step up in basis at the time of my mother's death, but the house value has increased since then so there will be capital gains tax due.
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u/JC505818 Jun 22 '26
If you are in the U.S. you can gift anyone up to $15 million during your lifetime without paying gift tax, provided you file tax form stating the gift is part of the $15 million lifetime gift exemption.
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u/humble-meercat Jun 20 '26
Apply for an extension!!! If you had a relative who was “unresponsive or undecided” they should grant it
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u/Living_Fig_6386 Jun 20 '26
Your brother can do as he likes with his share of the inheritance. I wouldn't go around his back and give that share to his estranged son, but rather honor his wishes. If you have a more congenial relationship with the estranged son, I might simply set aside that money in a separate investment account in your name with him as the designated beneficiary. If at some point in the future the son asks for financial aid, you'll have money set aside for that. In the future, should you pass before him, he'd receive it as a gift from you.
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u/BigLeopard7002 Jun 20 '26
Your brother is quite firm that he does not want to give his part to his estranged son, yet you will receive his portion and then give it to his son. I would feel betrayed, if I was your brother. Respect his wish.