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Inheritance Questions

cycloner29

cycloner29

Well-Known Member
Dec 17, 2008
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Wife’s siblings are getting an inheritance from the sale of a house. Questions are:
​

1. Is it easier for one sibling to take entire amount and deposit in their own account or to have the bank issue cashiers checks to everyone? I need to add that taxes and fees have been taken into account already as the house was sold for a substantial amount more than when it was purchased.

2. If the one sibling deposits the check, will that move them into a higher tax bracket. The plan is to disperse it right away to the other siblings. I’m under the assumption that it won’t since it is not considered earned income.

Never been through this before so hence the questions. I’m sure that @isufbcurt have an easy answer for me. TIA!
 
cycloner29 said:
Wife’s siblings are getting an inheritance from the sale of a house. Questions are:
​

1. Is it easier for one sibling to take entire amount and deposit in their own account or to have the bank issue cashiers checks to everyone? I need to add that taxes and fees have been taken into account already as the house was sold for a substantial amount more than when it was purchased.

2. If the one sibling deposits the check, will that move them into a higher tax bracket. The plan is to disperse it right away to the other siblings. I’m under the assumption that it won’t since it is not considered earned income.

Never been through this before so hence the questions. I’m sure that @isufbcurt have an easy answer for me. TIA!
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Best to have multiple checks issued. Last thing you need in this situation is the family member who gets the check dragging their feet in splitting it or even worse disappearing.
 
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Probably need to look to the inheritance laws in Iowa assuming that is where the real estate is located. It should already be in the will to split to living siblings? Or is there just no will?
 
Nelcyn said:
Probably need to look to the inheritance laws in Iowa assuming that is where the real estate is located. It should already be in the will to split to living siblings? Or is there just no will?
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No will. It is in Iowa.
 
cycloner29 said:
1. Sibling
2. It was under the deceased sibling’s name. It was foreclosed on No estate.
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I would get a lawyer. When I was executor for my parent's estate, the lawyer fees were on a sliding scale depending upon the size of the estate. All in all, I thought they were very reasonable. Doing a web search reveals the fee is generally 2% of the estate
https://attorney-faq.com/what-are-the-costs-of-attorney-fees-in-the-state-of-iowa-on-an-estate


If the house was foreclosed on, I would think the bank would own it and the siblings would be able to sell it themselves.
 
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Note that a lawyer is already involved. His fees and tax are already accounted for and debtors were contacted but none came forth. It ended up being a sheriff sale as none of the siblings wanted to deal with it.
 
cycloner29 said:
Note that a lawyer is already involved. His fees and tax are already accounted for and debtors were contacted but none came forth. It ended up being a sheriff sale as none of the siblings wanted to deal with it.
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Then contact the lawyer. This is what they are getting paid for. To properly handle the death and assets of deceased.
 
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cycloner29 said:
Wife’s siblings are getting an inheritance from the sale of a house. Questions are:
​

1. Is it easier for one sibling to take entire amount and deposit in their own account or to have the bank issue cashiers checks to everyone? I need to add that taxes and fees have been taken into account already as the house was sold for a substantial amount more than when it was purchased.

2. If the one sibling deposits the check, will that move them into a higher tax bracket. The plan is to disperse it right away to the other siblings. I’m under the assumption that it won’t since it is not considered earned income.

Never been through this before so hence the questions. I’m sure that @isufbcurt have an easy answer for me. TIA!
Click to expand...
If this is sold soon after death should be no tax do to step up in basis. You said further down you had an attorney, get a different attorney.
 
Sibling has been gone for over two years. Covid really slowed the process down. Everything has been taken care of. Just wanted to make sure I am correct in saying by putting what is left in our account that come tax time we should not get raked over the coals since this was not earned income.. Thanks!
 
cycloner29 said:
Sibling has been gone for over two years. Covid really slowed the process down. Everything has been taken care of. Just wanted to make sure I am correct in saying by putting what is left in our account that come tax time we should not get raked over the coals since this was not earned income.. Thanks!
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You need a tax advisor, then. A quick googling makes it look like 5-10% for an inheritance from a sibling (edit: for Iowa). But, again, the aforementioned attorney should be taking care of the distribution and tax documentation, or they should maybe be fired and/or disbarred.
 
With foreclosure, shouldn't the bank get the proceeds and not anyone else? They foreclosed because of lack of payment which means they take the house. Did you mean short sale?
 
twojman said:
With foreclosure, shouldn't the bank get the proceeds and not anyone else? They foreclosed because of lack of payment which means they take the house. Did you mean short sale?
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If the loan was 50k and the house sells for 250k. The bank only gets what they are owed (50k), not the full amount.
 
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