Where to put inherited farm land.
Myself and my 2 brothers have inherited a farm (that was in our parents’ trust) that we are going sell within a year. Should we set up a trust for the farm with all our names on it or is it ok to just have the farm put in our 3 names. Thank you.
Terry Says
It is VERY important that you check with your estate attorney — the one who set up the parental estate plan. If it’s in their Revocable Living Trust, with each of you as equal beneficiaries, it likely should just be held in the trust until it is sold, and then the named successor trustee will distribute the proceeds.
Yes, I understand that one of the three of you might want the money asap! So perhaps the other two could offer a loan to that person, secured by his share of the farm.
But if my assumptions above are correct, it will make filing taxes much easier for the estate if you just sell it directly out of the trust. There will be no capital gains tax since the property gets a “step-up” in value to the date of death. And unless it is worth more than $18 million, along with their other property, there would be no Federal estate tax. You’d each get the money tax free.
Again, check with the attorney that created the estate plan. (There might be a state inheritance tax involved, as well.
